Further Definition of “Swap Dealer,” “Security-Based Swap Dealer,” “Major Swap Participant,” “Major Security-Based Swap Participant” and “Eligible Contract Participant” (CFTC/SEC)

See: 77 FR 30596

The CFTC and SEC have jointly adopted rules to further define the terms relating to certain entities, i.e., "swap dealer," "security-based swap dealer," "major swap participant," "major security-based swap participant," "security-based swap dealer," "major security-based swap participant," which were added to the CEA and the Exchange Act by the Dodd-Frank Act, and "eligible contract participant," which is currently defined in CEA Section 1a(18). The entity definitions constitute a significant component of the regulatory regime that Dodd-Frank imposes on the OTC derivatives market. The rulemaking also includes an interim final rule that excludes from "swap dealing" those transactions that hedge or mitigate commercial risk and defines the terms "hedge or mitigate commercial risk" for purposes of that exclusion.

Effective Date: The effective date for this joint final rule and joint interim final rule: July 23, 2012, except for CFTC regulations at 17 CFR 1.3(m)(5) and (6), which are effective December 31, 2012.

Compliance Date: Compliance with the element of the CFTC regulation at 17 CFR 1.3(m)(8)(iii) requiring that a commodity pool be formed by a registered CPO shall be required with respect to a commodity pool formed on or after December 31, 2012 for any person seeking to rely on such regulation; compliance with such element shall not be required with respect to a commodity pool formed prior to December 31, 2012.

Comments Due: The comment period for the interim final rule (CFTC regulation at 17 CFR 1.3(ggg)(6)(iii)) will close July 23, 2012.

Cross References: Dodd-Frank Sections 712, 721, 754, 761, and 774; CFTC Rule 1.3; CFTC Proposed Rule Amendments 1.3(m) and 1.3(ggg); Exchange Act Sections 3 and 23; Exchange Act Proposed New Rules 3a67 and 3a71.

For more information about this document, you may contact one of the following Cadwalader attorneys: Steven D. Lofchie; Robert Zwirb.