Legal updates provided by JD Supra

The Commodity Futures Trading Commission CFTC has issued numerous rulemakings under Dodd-Frank regarding swap dealers and major swap participants (SD/MSPs) at several meetings between 2010 and 2012. The issues discussed were: duties; registration; conflicts of interest; required compliance policies; reporting and recordkeeping; further defining “swap dealer,” “major swap participant” and “eligible contract participant”; business conduct standards, confirmation; confirmation, reconciliation and compression; swap trading relationship documentation; orderly liquidation termination; and margin requirements for uncleared swaps.

The Securities and Exchange Commission (SEC ) has also issued several rulemakings regarding security-based swap dealers and major swap participants (SB-SD/MSPs). Topics for which rules have been proposed but not finalized include business conduct standards, registration, and swap entity definitions (joint rule with CFTC ). The final rulemaking on swap entity definitions. also issued jointly between the CFTC and SEC, was issued on April 18, 2012.

In late 2011, the CFTC began issuing final rules pertaining to SD/MSPs. As of September 2012, the CFTC had finalized all rules except those pertaining to uncleared swaps, margin and capital requirements. Aside from the definitions rules, which were approved jointly with the CFTC, the SEC has not finalized any rules. Topics for which a final rulemaking has been issued can be found in the alert box at the top of the page. Summaries and links can also be found below.

For a comprehensive timeline of swap regulation, visit the Topics Related to Swaps Regulation page.

Descriptions of each rule can be found below, along with links to the final rule, rule as it was originally proposed, and links to related comment letters submitted by market participants.

CFTC Open Meetings

Duties for Swap Dealers and Major Swap Participants

The Duties proposal requires swap dealers and major swap participants to:

• Establish risk management programs that must take into account all relevant risks;
• Monitor trading through staff training, trade supervision, and establish early warning, testing, compliance, and annual audit systems;
• Establish business continuity and disaster recovery systems;
• Disclose information and make it available for inspection by the commission; and
• Adopt appropriate policies concerning anti-competitive trading or clearing practices. [1]