Alert July 19, 2011

CFTC Issues Order Postponing Effectiveness of Various Elements of New Dodd-Frank Regulatory Framework for Swaps

The CFTC issued an order that provides temporary exemptive relief from certain requirements in the Commodity Exchange Act (the “CEA”) resulting from the Dodd-Frank Act that otherwise became effective on July 16, 2011 under the terms of the Act.  The relief contains two principal elements.  The first provides 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 had not done by July 16); the exemption continues until the effective date of final rules defining those terms or December 31, 2011, whichever is earlier.  The second element of the order temporarily exempts certain transactions (primarily in financial, energy and metals commodities) from certain CEA provisions that apply as a result of the repeal of various CEA exemptions and exclusions under the Dodd‑Frank Act; the exemption applies until the repeal or replacement of certain CFTC regulations or December 31, 2011, whichever is earlier.