CFTC Adopts Final Business Conduct Standards for Swap Dealers and Major Swap Participants



On January 11, the Commodity Futures Trading Commission approved final rules (the Final Rules) under Section 4s(h) of the Commodity Exchange Act (CEA) (added by Section 731 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the Dodd-Frank Act)) that set forth general antifraud prohibitions and establish detailed business conduct standards that must be observed by CFTC-registered swap dealers (Swap Dealers or SDs) and major swap participants (MSPs) (together, Swap Entities) when they are entering into swaps with counterparties other than other Swap Entities (End Users).

The Final Rules have softened some of the most onerous and widely criticized provisions of the original conduct standards proposed by the CFTC (the Proposed Rules) by providing conduct safe harbors and allowing reliance on counterparty representations. Nevertheless, the Final Rules still contain many provisions that drastically alter the way an uncleared swap must be negotiated and executed between a Swap Entity and an End User, particularly if the Swap Entity’s counterparty falls within a special subset of End Users known as “Special Entities,” which includes pension plans, governmental entities and certain other entities that receive enhanced protections under the Final Rules. Swap Entities will accordingly need to make significant modifications to their current ordinary course of business for swaps in order to be able to comply with the new rules when they become effective.

Please see full advisory below for more information.

LOADING PDF: If there are any problems, click here to download the file.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Katten Muchin Rosenman LLP | Attorney Advertising

Written by:


Katten Muchin Rosenman LLP on:

Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:

Sign up to create your digest using LinkedIn*

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.