Jeff Chen, a partner at the leading US law firm
Cadwalader, Wickersham & Taft LLP, joins Clayton Utz partner
Louise McCoach in this special collaboration to outline a recent
development in the Dodd-Frank regime and its effect on Australian
The Australian OTC derivatives market has welcomed the US
Commodity Futures Trading Commission's (CFTC)
20 December 2013 announcement that it has approved a series of
broad comparability determinations with respect to regulatory
frameworks for OTC derivatives enacted in Australia, Canada, the
EU, Hong Kong, Japan and Switzerland.
The determinations mean that major Australian banks who are
registered as swap dealers with the CFTC (ANZ, Commonwealth Bank,
Macquarie Bank, National Australia Bank and Westpac) can comply
with the Australian regulatory regime for OTC derivatives in a
number of areas, instead of complying with the relevant provisions
of the US Dodd-Frank Act. This decision is expected to
significantly reduce the Dodd-Frank compliance burden for
Australian swap dealers and result in cost savings.
More detailed information in relation to the substituted compliance
determinations is available here.
Notwithstanding this welcome development, the Dodd-Frank Act
still raises complicated cross-border issues which Australian swap
dealers need to be aware of. One of the most debated is the
potential application of the Dodd-Frank transaction-level
requirements to swaps entered into between a non-US swap dealer
(with involvement of its personnel or agents located in the United
States) and another non-US person.
There has been some movement on this front with the release of a
CFTC Staff Advisory on 14 November 2013. This states that a non-US
swap dealer would be required to comply with the transaction-level
requirements for transactions "arranged, executed or
negotiated by personnel or agents" of non-US swap dealers
located in the United States with non-US persons (Covered
Transactions). Subsequent to the Staff Advisory, the
Commission provided non-US swap dealers with no-action relief from
certain of the transaction-level requirements for Covered
Transactions until 15 September 2014.
The CFTC has opened this issue up for comment until 10 March
2014 before finalising its policy on this point. In a
dissenting statement of Commissioner Scott D. O'Malia, comments
are also being sought on more fundamental jurisdictional issues
relating to the CFTC's cross-border final guidance and on the
applicability to non-US swap dealers of transactional-level
We encourage all Australian swap dealers to respond to the
CFTC's request for comments. If you would like any assistance
with preparing a response or if you have any questions about the
impact of the above developments on your business, please contact
Jeff Chen on +852 2946 1100
or Louise McCoach on
+61 2 9353 4679.
Clayton Utz communications are intended to provide
commentary and general information. They should not be relied upon
as legal advice. Formal legal advice should be sought in particular
transactions or on matters of interest arising from this bulletin.
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