The Commodity Futures Trading Commission (the
"Commission") today adopted interim final rules that
defer the dates by which swap dealers ("SDs") and major
swap participants ("MSPs") are required to comply with
many provisions of the Commission's external business conduct
rules and with certain internal business conduct rules that require
agreements or the exchange of information with
Specifically, the interim final rules extend until May 1, 2013
the compliance date for Subpart H of Part 23 of Commission
regulations (other than regulations 23.410(a) and (b), 23.431(d),
23.433, 23.434(a)(1) and 23.451). The deferred rules include
disclosures of material risks, characteristics and incentives,
including disclosure of the pre-trade mid-market mark, scenario
analysis, clearing disclosures, the requirement to make
counterparty suitability determinations with respect to a
recommended swap or swap trading strategy and the provisions
relating to Special Entities (other than those relating to
political contributions). The May 1, 2013 compliance date also
applies to Commission Rules 23.505 (SD and MSP documentation of
end-user clearing exemption) and 23.201(b)(3)(ii) (records
indicating that the SD or MSP has notified its counterparty of an
address to which complaints may be directed). The current
compliance dates continue to apply to provisions of the external
business conduct rules relating to (i) prohibitions on fraud,
manipulation and abusive practices, (ii) disclosure of a daily
mark, (iii) fair dealings in communications, and (iv) reasonable
diligence to understand the potential risks and rewards associated
with a recommended swap or trading strategy.
In addition, the interim final rules extend until July 1, 2013
the compliance dates for Commission regulations 23.502 (portfolio
reconciliation) and 23.504 (swap trading relationship
documentation). The comment period on the interim final rules will
end 30 days after their publication in the Federal Register.
The interim final rules respond to requests for rulemaking from
the International Swaps and Derivatives Association, Inc. The
requests stated that the deferrals were necessary to facilitate a
smooth transition to the new regulatory regime and avoid market
disruptions and reduced liquidity.
Mayer Brown LLP is pleased to have been able to assist ISDA in
its request and discussions with Commissioners and Commission
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Mayer Brown article provides information and comments on legal
issues and developments of interest. The foregoing is not a
comprehensive treatment of the subject matter covered and is not
intended to provide legal advice. Readers should seek specific
legal advice before taking any action with respect to the matters
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