Alert May 22, 2012

CFTC Proposes Further Extension of Implementation of Certain Swap Regulations

The CFTC issued a proposal that would amend, for the second time, its order delaying the effective date for certain regulations applicable to swaps that refer to terms that have not yet been defined by CFTC regulation.  The proposed second amendment would further delay the latest effective date to December 31, 2012 (or, depending on the nature of the relief, such other compliance date as may be determined by the Commission).  It also removes the entity definition terms (such as “swap dealer,” “major swap participant,” and “eligible contract participant”) from the original order, as such terms have now been defined by the CFTC and SEC.  Key terms still to be defined include “swap,” “security-based swap,” and “security-based swap agreement.”

The original order, which became effective on July 14, 2011, granted temporary exemptive relief from certain provisions of the Commodity Exchange Act (as amended by the Dodd-Frank Act) until the earlier of (1) the effective date of the rule further defining the relevant term referenced in the provision and (2) December 31, 2011.  The first amendment to that order delayed the potential latest effective date from December 31, 2011 to July 16, 2012.

The proposal was approved unanimously by the CFTC’s five commissioners.  Comments on the proposal are due by May 30, 2012.