Dodd-Frank Update: CFTC Delays Swap Dealer Registration Rule

“[S]wap dealers would be granted a short-term delay on a new rule that mandates the counting of swaps as a component of registration… The new rules have been the subject of controversy and presidential debate politics over the last few weeks. Republicans have accused the CFTC of ideological maneuvering and wastefulness as they pursue controversial position-limits rules in court.” (Shipkevich)

On October 12, the Commodities Futures Trading Commission (CFTC) issued guidance that provides swap dealers and other industry participants relief from controversial new registration requirements. Here’s a roundup of legal commentary and analysis on the CFTC’s no-action letter:

Temporary Relief from Registration for Swaps Intermediaries (Morgan Lewis):

“The CFTC’s definition of ‘swap’ became effective on October 12. As a result, persons and entities involved with soliciting for, transacting in, and/or advising on swaps now fall within the definition of an ‘introducing broker,’ ‘commodity pool operator,’ or ‘commodity trading advisor’ or an ‘associated person’ of the foregoing, as appropriate under the Commodity Exchange Act. Accordingly, absent the relief … such persons would have been required to either be registered with the CFTC by October 12 or cease their swaps activities.” Read on>>

CFTC Delays Registration Deadline for Certain Commodity Pool Operators and Commodity Trading Advisors (Skadden, Arps, Slate, Meagher & Flom LLP):

“… the Temporary No-Action Relief confirms that [the Division of Swap Dealer and Intermediary Oversight] would not recommend an enforcement action be brought against a [commodity pool operator] or [commodity trading advisor] for failing to register as such by October 12, 2012, if the registration requirement arose solely because of the entity’s activities involving swaps (as opposed to futures, options or any other instruments that were within the CFTC’s jurisdiction prior to October 12, 2012).” Read on>>

Unintended Consequences Avoided? CFTC Provides Relief for Certain Securitization Vehicles (Dechert LLP):

“Traditional CMBS and RMBS transactions should fall within the criteria for exclusion, but most CLOs and CDOs do not. Instead, these vehicles will need to consider other avenues for exclusion or exception, such as CFTC Rule 4.13(a)(3) which exempts commodity pool operators from registration and regulation who engage only in de minimis pool trading.” Read on>>

CFTC Grants Short-Term Extension for Swap Dealers (Shipkevich PLLC):

“One CFTC commissioner, Republican Scott O’Malia publicly aired grievances about the last-minute approach of his agency. ‘While this is a step in the right direction, the commission should never have gotten to the point where it was forced to issue such last-minute piecemeal relief,’ O’Malia said.” Read on>>

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