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On July 6 and July 10, the Securities and Exchange Commission
(the "SEC") and the Commodity Futures Trading Commission
(the "CFTC" and, together with the SEC, the
"Commissions"), respectively, adopted final rules
defining the terms "swap," "security-based
swap," and "security-based swap agreement,"
governing "mixed swaps," and establishing books and
records requirements for "security-based swap
agreements." This marks a critical milestone in the Dodd-Frank
regulatory scheme, as the compliance dates for many other rules
under the Dodd-Frank Act (some of which already have been finalized
by the Commissions) are dependent on adoption of these definitional
rules.
The definitional rules will become effective 60 days after their
publication in the Federal Register, which is expected to occur in
the near future. Entities subject to the new Dodd-Frank rules will
be required to comply with many new requirements, such as swap data
recordkeeping and reporting, position limits, and registration of
dealers or major participants, in some cases as soon as the date on
which the definitional rules become effective (i.e., as early as
September 2012). The definitional rules will also be significant to
fund sponsors and advisers as they analyze their commodity pool
operator and commodity trading advisor registration status in the
wake of the repeal of the registration exemption under CFTC Rule
4.13(a)(4) and modifications to the exclusion and exemption under
CFTC Rules 4.5 and 4.13(a)(3), respectively.
Additional information regarding the definitional rules adopted
by the Commissions, as well as the timing of compliance dates for
various other Dodd-Frank Act rules that will be triggered by the
effectiveness of the definitional rules, will be provided in a
separate client alert following publication of the definitional
rules in the Federal Register.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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