At a Friday meeting, the CFTC proposed a phased compliance program covering U.S. and non-U.S. Swap Dealers (SDs) and Major Swap Participants (MSPs), as well as foreign branches of U.S. SDs and MSPs.

The phased compliance period would become effective on the compliance date for SD/MSP registration and expire:

- January 1, 2013 for U.S. SDs and MSPs

- 12 months after the proposal is published for non-U.S. SDs/MSPs and foreign branches of U.S. SDs/MSPs

Compliance deadlines would also vary for entity-level and transaction-level requirements:

- All SDs and MSPs will receive additional time before they must comply with entity-level requirements

-Non-U.S. SDs/MSPs and foreign branches of U.S. SDs/MSPs will only be required to comply with transaction-level requirements as may be required in the home jurisdiction or location of the relevant entity.

In order to qualify for phased compliance, non-U.S. SDs/MSPs and foreign branches of U.S. SDs/MSPs would be required to:

-Register as an SD or MSP with the National Futures Association (NFA), and

-Submit a compliance plan to the NFA, within 60 days of applying for registration, outlining how it plans to comply with the CEA, including: (a) Whether it plans to comply with requirements directly, or seek on a comparability determination and rely on compliance with the requirements of the home jurisdiction; and (b), a description of the requirements of the home jurisdiction, to the extent that it plans to rely on such requirements.

The guidance will be open for public comment for 45 days after publication in the Federal Register, and swaps market participants may wish

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SEC Finalizes Swap Clearing Review Rules

The SEC announced Thursday that it has adopted rules to govern its review of swap clearing agencies.  Under the new rules, clearing agencies must provide the SEC with information about securities-based swaps they intend to accept for clearing. The rule will enable the SEC to fulfill its duty of deciding which securities based swaps will be required to be cleared as mandated by the Dodd-Frank Act.

The SEC has also adopted rules requiring clearing agencies designated as “systemically important” to provide notice to the SEC before making certain changes to its rules, procedures, or operations. Notice will generally be required when:

-The proposed change would affect the risk management functions performed by the clearing agency that are related to systemic risk.

-The proposed change could affect the clearing agency ability to continue to perform its core clearance and settlement functions.

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NFA Requests Corrections to Proposed Rules

In a letter to the CFTC, the NFA has requested corrections to rules it had submitted to the Commission on January 20th regarding Swap Dealers, Major Swap

Participants and Derivative Transaction Execution Facilities.

The corrections are intended to resolve discrepancies between two of the proposed amendments and analogous CFTC rules.

1. Add ”chief compliance officer” to the definition of principal contained in the proposed amendment to Registration Rule 101(t), in order to align it with the April 3 amendment to CFTC regulation 3.1(a)(1).

2. To substitute the term “responsible” for the term “liable” in Registration Rules 201(b)(4) and 207(b)(3).

At Shipkevich Law, regulatory compliance and registration with the CFTC and NFA is our specialty. If you have questions about the registration process, or would like our assistance registering as a CPO or CTA, contact us at 212-252-3003 or contact@shipkevichlaw.com.