Alert October 19, 2010

SEC and CFTC Adopt Interim Final Temporary Rules Regarding Reporting of Security Based Swap and Swap Transaction Data Pursuant to Dodd-Frank Act

The SEC adopted an interim final temporary rule for the reporting of security-based swaps entered into before July 21, 2010, the terms of which had not expired as of that date  (“pre-enactment security-based swap transactions”), designed to implement Section 766 of the Dodd‑Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”).  The SEC also issued an accompanying Interpretive Note to the rule that states that counterparties that may be required to report to the SEC will need to preserve information pertaining to the terms of these pre‑enactment security-based swaps. The SEC’s rule is effective upon its publication in the Federal Register and will remain in effect until the earlier of (a) the operative date for permanent recordkeeping and reporting rules for security-based swap transactions to be adopted by the SEC or (b) January 12, 2012.  The SEC is also seeking comment on the rule; comments are due no later than 60 days after the rule’s publication in Federal Register.

Pursuant to Section 729 of the Dodd-Frank Act, the CFTC adopted a corresponding interim final rule and interpretive note regarding reporting and recordkeeping related to swaps entered into before July 21, 2010, the terms of which had not expired as of that date.  The CFTC rule was effective October 14, 2010.  The CFTC is also seeking comment on its interim final rule; comments must be received no later than November 15, 2010.

For additional detail on these and other SEC and CFTC rulemaking mandates under provisions of the Dodd‑Frank Act affecting derivatives regulation, see the August 2, 2010 Special Edition of the Alert.