Derivatives in Review, December 2015


The Derivatives in Review highlights the month's important legal, regulatory and other newsworthy developments in the area of derivatives.

Prudential Regulators Approve Final Uncleared Margin Rules

In October, the prudential regulators approved a final version of the September 2014 re-proposed rule generally imposing initial and variation margin requirements on certain banks and their counterparties in connection with non-cleared swaps and non-cleared security-based swaps.  Likewise, on December 16, 2015, the CFTC approved its own final margin rules for uncleared swaps applicable to entities subject to its jurisdiction.  The SEC has proposed, but not finalized, margin rules for uncleared security-based swaps applicable to entities subject to its jurisdiction.  Read More.

Status of Security-Based Swap Regulation and the Related Cross-Border Framework, an Overview

The CFTC has now implemented many of the requirements applicable to swaps under Title VII of the Dodd-Frank Act.  In contrast, substantially all of the SEC's rules under Title VII regulating security-based swaps are not yet effective.  However, the SEC has issued various proposed and final (but not yet effective) rules and indicated its "anticipated" sequencing of the relevant compliance dates.  In addition, the SEC has issued various proposed and final rules pertaining to the cross-border application of such rules.  Read More.

CFTC Proposes "Regulation AT" on Automated Trading

On November 24, the Commodity Futures Trading Commission issued a notice of proposed rulemaking on the regulation of automated trading on U.S. designated contract markets, which would be known as "Regulation AT."  The stated purpose of Regulation AT is to reduce risk and increase transparency through measures applicable to trading firms, clearing members and exchanges engaging in automated trading.  Read More.

CFTC Issues Swap Dealer De Minimis Exception Preliminary Report

On November 18, the Commodity Futures Trading Commission issued for public comment the Swap Dealer De Minimis Exception Preliminary Report.  This report was issued by the CFTC to assess the de minimis exception and to allow public comment on the relevant policy considerations. Following publication of, and public comment on, a subsequent "final report," the CFTC may either extend the existing phase-in period of the exception or issue a notice of proposed rulemaking to modify the exception.  Read More.