Alert August 02, 2011

CFTC Adopts Rules Implementing New Framework for Approving New Products and Rule Changes Submitted by Registered Entities

The CFTC adopted final rules (with corrections) establishing a new procedural framework for the submission of new products, rules, and rule amendments by designated contract markets, derivatives clearing organizations, swap execution facilities, and swap data repositories.  In addition, the final rules prohibit event contracts involving certain excluded commodities, establish special submission procedures for certain rules proposed by systemically important derivatives clearing organizations (‘‘SIDCOs’’), and stay the certifications and the approval review periods of novel derivative products that have elements of both a security and a derivative pending the issuance of a final determination order as to CFTC or SEC jurisdiction.  The final rules also require an SIDCO to provide the CFTC with 60-day advance notice of any proposed change to its rules or procedures that could materially affect the nature or level of risks the SIDCO presents.  The final rules are effective September 26, 2011.