Dodd-Frank Act

The CFTC’s recent release of several final rules, including rules regarding registration of swap dealers and major swap participants, allows renewed consideration of the speed and sequencing of implementation of Title VII of Dodd Frank. The attached Update attempts to put recent CFTC actions in perspective, set against the CFTC’s own July 2011 “Effective Date for Swap Regulation” final order and the tentative schedule for further rule releases that Chairman Gensler made public at the CFTC’s January 11 open meeting.

On July 26, 2011, the US Securities and Exchange Commission (the “SEC”) issued a re-proposal (the “Revised Proposal”)1 of the Form SF-3 shelf registration statement eligibility rules originally contained in the SEC’s massive Asset-Backed Securities rule proposed in April 2010 (the “Original Reg AB II Proposal”).2 The Revised Proposal is designed, in part, to align the Original Reg AB II Proposal with the various subsequent rulemaking initiatives under the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”). The Revised Proposal also reflects comments on the Original Reg AB II Proposal received by the SEC3 and seeks additional comments on numerous aspects of the asset-level data disclosure rules and other provisions in the Original Reg AB II Proposal.

The Commodity Futures Trading Commission, meeting in open session today, passed a proposed order to address effective date concerns engendered by the anticipated lack of completion of the majority of needed implementing regulations by the July 16 date indicated by the statute. The proposed order will be subject to a 14-day comment period. As of this writing, the proposed order is not yet available and thus close analysis will await the proposed order’s publication.

On March 30, 2011, the U.S. Securities and Exchange Commission (SEC) unanimously approved its proposing release “Listing Standards for Compensation Committees,”1 to implement Section 952 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the Dodd-Frank Act), which added Section 10C to the Securities Exchange Act of 1934 (Exchange Act). This provision requires the SEC to adopt rules directing the national securities exchanges to prohibit the listing of equity securities of any issuer not in compliance with the compensation committee independence requirements and compensation adviser requirements set forth in the Dodd-Frank Act, and to adopt disclosure rules concerning compensation consultants and conflicts of interest.

In two separate, but related, notices of proposed rulemaking (NOPRs) published in the Federal Register on February 8, 2011, the US Commodity Futures Trading Commission (CFTC) has proposed rules to implement the requirements of Section 731 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the Dodd-Frank Act), which added new section 4s to the Commodity Exchange Act (CEA). The proposed rules regarding swap trading relationship documentation would be contained in a new 17 CFR Part 23. The first of these NOPRs (the Primary Swap Documentation NOPR) proposes rules that require the CFTC to prescribe standards for swap dealers (SDs) and major swap participants (MSPs) related to the timely and accurate confirmation, processing, netting, documentation and valuation of swaps. The second NOPR (the Swap OLA Provision NOPR) requires the inclusion of an orderly liquidation provision in the swap trading relationship documentation. Comments on each of the NOPRs are due on or before April 11, 2011.

On June 30, the US House of Representatives voted 237 to 192 to approve the Dodd-Frank Wall Street Reform and Consumer Protection Act. Upon enactment, the legislation will change the way financial services are delivered in the United States, and how US and non-US banks, bank holding companies, securities firms, insurance companies, and other providers of financial services are regulated.