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Legal Update

End Users and OTC Energy Derivatives: Potential Impacts Under the Wall Street Transparency and Accountability Act of 2010

27 August 2010
Mayer Brown Legal Update
Title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act, titled as the Wall Street Transparency and Accountability Act of 2010 (the “Act”), eliminates the exemption from regulation under the Commodity Exchange Act for most over-the-counter (OTC) energy derivatives; it imposes a new regulatory regime for OTC derivatives, which will, at a minimum, increase the transaction costs to US transportation companies, utilities, manufacturers, energy producers and other businesses actively hedging their exposure to fluctuating energy prices; and it could potentially subject some such businesses to the same increased regulatory oversight, including minimum capital requirements and minimum initial and variation margin requirements, as is mandated for those participants in the OTC derivatives market that qualify as “swap dealers” or “major swap participants.”

Authors

  • J. Paul Forrester
    T +1 312 701 7366
  • Joshua Cohn
    Senior Counsel, Independent Contractor
    T +1 212 506 2539

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