Alert June 21, 2011

CFTC Issues Proposed Order Postponing Effectiveness of Various Elements of New Dodd-Frank Regulatory Framework for Swaps; SEC Issues Exemptive Relief Regarding Compliance with Dodd-Frank Security-Based Swap Provisions

The CFTC issued a proposed order that would provide temporary exemptive relief from certain requirements in the Commodity Exchange Act (the “CEA”) resulting from the Dodd-Frank Act that otherwise become effective on July 16, 2011 under the terms of the Act.  The proposed relief contains two principal elements.  The first would provide a temporary exemption from provisions that reference terms such as “swap,” “swap dealer,” “major swap participant,” or “eligible contract participant” that the Dodd-Frank Act requires the CFTC and SEC to “further define” (which the agencies will not have done by July 16); the exemption would continue until the effective date of final rules defining those terms or December 31, 2011, whichever is earlier.  The second element of the CFTC proposal would temporarily exempt certain transactions (primarily in financial and energy commodities) from certain CEA provisions that will apply as a result of the repeal of various CEA exemptions and exclusions under the Dodd-Frank Act; the exemption would apply until the repeal or replacement of certain CFTC regulations or December 31, 2011, whichever is earlier.  The CFTC is seeking public comment on the proposed order; comments must be received no later than July 1, 2011.

The SEC issued an order providing temporary exemptions from, other temporary relief from and guidance regarding, compliance dates for provisions of the Securities Exchange Act of 1934 that address and regulate security-based swaps as a result of the Dodd-Frank Act.  The SEC has requested public comment on the order subject to a submission deadline of July 6, 2011.