CFTC and SEC Provide Temporary Relief From Swap Regulation

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The Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Act”) establishes a new regime for the regulation of over-the-counter derivatives. The Act gives jurisdiction to the Commodity Futures Trading Commission (the “CFTC”) over the regulation of swaps and to the Securities and Exchange Commission (the “SEC” and, together with the CFTC, the “Commissions”) over the regulation of security-based swaps. Jurisdiction for the regulation of mixed swaps is shared between the CFTC and the SEC. The Act, among other things, amends the Commodity Exchange Act (the “CEA”) to establish a comprehensive new regulatory framework for swaps and amends the Securities Act of 1933 (the “Securities Act”) and the Securities Exchange Act of 1934 (the “Exchange Act”) to expand the regulation of the security-based swaps market. Sections 754 and 774 of the Act provide that, unless otherwise provided, the provisions of Subtitle A and B of Title VII of the Act shall take effect on the later of 360 days after the date of enactment or, to the extent a provision requires rulemaking, not less than 60 days after the publication of the final rule implementing such provision. The effect of Sections 754 and 774 is that a number of provisions, including numerous amendments to the CEA and compliance obligations under the Exchange Act, were due to become effective on July 16, 2011 (the “Effective Date”) unless the CFTC and SEC intervened.

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