Two years ago, on July 21, 2010, President Obama signed into law a package of financial regulatory reforms unparalleled in scope and depth since the New Deal. The Dodd-Frank Act was intended to restructure the regulatory framework for the US financial system, with broad and deep implications for the financial services industry where the crisis started. But its impact also was intended to be felt well beyond the financial sector, extending federal regulation into areas of corporate governance applicable to all US public companies.
Few provisions of the Dodd-Frank Act took effect in the summer of 2010. Instead, the specifics of the Act were intended to be developed through the federal rulemaking process, as the Act mandated the development and implementation of nearly 400 separate regulations to be enacted by, or coordinated among, nearly a dozen federal departments or agencies. To date, the deadlines for more than half of the required rulemakings have expired. But even with these delays, the last two years have witnessed the promulgation of more than 100 rules and the issuance of many additional proposed regulations for public comment. This Report discusses the many strides that have been made pursuant to the Act to date and forecasts what is yet to come.
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On April 18, 2012, the Commodity Futures Trading Commission (the “CFTC”) and the Securities Exchange Commission (the “SEC,” and together with the CFTC, the “Commissions”) adopted the much-anticipated joint final rules further defining “swap dealer,” “major swap participant,” “security-based swap dealer,” and “major security-based swap participant” under the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”).
The final rules are largely consistent with the Commissions’ proposed rules, which were published in the Federal Register on December 21, 2010, with a few significant differences. For example, the final rules raised the de minimis exemption threshold for the swap dealer and security-based swap dealer definition considerably and also removed from the de minimis exemption the limits on the number of swaps or security-based swaps that a person can enter into during a 12-month period and the number of counterparties with which the person can enter into such swaps or security-based swaps during a 12-month period. The final rules also provided the ratio for the “highly leveraged” definition used in the third alternative test for determining whether a person is a major swap participant (“MSP”) or major security-based swap participant (“MSSP”). Another significant change from the proposed rules is the addition to the final rules of a safe harbor from the MSP/MSSP definition and the related tests. These changes and more are discussed in further detail below. [click to continue…]
By Heath Tarbert and Dimia Fogam
The Board of Governors of the Federal Reserve System (FRB), the Office of the Comptroller of the Currency (OCC), and the Federal Deposit Insurance Corporation (FDIC) (collectively, the Agencies) issued guidance to clarify the effective date of Section 716 of Dodd-Frank, commonly referred to as the Push-Out Rule. The Agencies stated that Section 716 will become effective on July 16, 2013.
Section 716 prohibits federal assistance, including access to the Federal Reserve discount window and FDIC deposit insurance, to any swaps entity with respect to any swap, security-based swap, or other activity of the swaps entity. The term “swap entity” refers to any swap dealer, security-based swap dealer, major swap participant, or major security-based swap participant that is registered under the Commodity Exchange Act or Securities Exchange Act of 1934. However, the rule allows certain entities to remain eligible for [click to continue…]
By Jakub Biernacki
The Commodity Futures Trading Commission (the “CFTC”) adopted final rules under the Commodity Exchange Act (the “CEA”) that established the process for the registration of swap dealers (“SDs”) and major swap participants (“MSPs”, and collectively with SDs, “Swaps Entities”) and the timing of the Swaps Entity registration requirements. The CFTC adopted these regulations in accordance with section 4s of the CEA, which was recently added to the CEA by the Dodd-Frank Wall Street Reform and Consumer Protection Act. These final rules are based in large part on the CFTC’s registration regulations proposed on November 23, 2010, and have become effective as of March 19, 2012. Please note that the full scope of the regulatory requirements for Swaps Entities is not yet settled as we are still awaiting final rules that provide [click to continue…]
by David E. Wohl and Kira F. Stanfield
The Commodity Futures Trading Commission (the “CFTC”) and the Securities and Exchange Commission (the “SEC”) have announced the adoption of new rules under the Commodity Exchange Act and the Investment Advisers Act of 1940 (the “Advisers Act”) requiring SEC-registered investment advisers to private funds (including private equity funds, hedge funds and liquidity funds) to periodically file Form PF with the SEC. The stated purpose of the new rules is to implement provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”) designed to assist the Financial Stability Oversight Counsel (the “FSOC”) in monitoring potential systemic risks to the United States financial system. As discussed below, the timing and types of information that an adviser is required to disclose on Form PF depends on whether such adviser manages private equity funds, hedge funds or liquidity funds and the size of those funds. [click to continue…]