“CFTC and SEC Finalize Product Definitions Under Title VII of Dodd-Frank”
The Commodity Futures Trading Commission and the Securities and Exchange Commission (the “Commissions”) have issued a release (the “Final Release”) setting forth interpretive guidance and final rules (the “Final Rules”) to implement Title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) that: (i) further define the terms “swap,” “security-based swap,” and “security-based swap agreement”; (ii) prescribe regulations regarding “mixed swaps”; and (iii) govern books and records, including daily trading records, for SBSAs.
Section 721 of the Dodd-Frank Act amends the CEA by adding definitions for the terms “swap,” “security-based swap,” and “security based swap agreement,” and Section 712(d)(1) mandates that the Commissions, in consultation with the Federal Reserve Board (the “Board”), further define those terms. Section 712(d)(2) of the CEA further provides that the Commissions jointly prescribe such regulations regarding “mixed swaps” as may be necessary to carry out the purposes of Title VII of the Dodd-Frank Act. Finally, Section 712(d)(2) of the Dodd-Frank Act requires the Commissions, in consultation with the Board, to jointly adopt rules governing books and records requirements for SBSAs.
This Stroock Special Bulletin highlights the major provisions of the Final Rules.