Derivatives Month in Review

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Dodd-Frank Act Implementation Update

Title VII of the Dodd-Frank financial reform, titled the Wall Street Transparency and Accountability Act of 2010, was enacted on July 21th, 2010 and is generally intended to bring the $700 trillion over-the-counter derivatives market under greater regulation. For a summary of several noteworthy developments in its implementation since our last update, please click here.

Topics addressed include:

  • Joint Report on International Swap Regulation
  • Publication of Final Rules
  • Speculative Trading Limits
  • The Definition of "Swap Dealer"
  • Clearing
  • Collateral Segragation of Cleared Swaps
  • Reporting and Recordkeeping
  • Business Conduct Standards

Greece Inches Closer to Triggering a Credit Event

With an enormous €14.5 billion bond maturing on March 20th, Greece continues to negotiate with its private sector investors on the reduction of approximately €100 billion of its total €350 billion of debt. Agreement with these investors and the implementation of austerity measures are required for Greece to secure from the European Union and International Monetary Fund the second installment of bailout funds, approximately €130 billion, necessary for the country to avoid default. However, despite the cautious structuring of its planned debt swap with private investors, as the country's economic conditions deteriorate it is becoming increasingly possible that Greece will at some point trigger a "credit event" under credit default swap contracts. For a complete summary, please click here.

ISDA Publishes Industry Provisions for Collateral Segregation of Uncleared Swaps

On December 6th, 2011, the International Swaps and Derivatives Association, Inc., published sample tri-party provisions intended to assist market participants in the negotiation of provisions relating to the segregation of excess collateral, or "independent amounts." For a complete summary regarding these provisions, please click here.

CFTC Issues Final Rule on CPO/CTA Registration and Compliance Regulations

On February 9th, the CFTC approved certain rule changes intended to increase transparency to the CFTC of commodity pool operators and commodity trading advisors active in the futures and swaps markets. For a complete summary regarding these changes, please click here.

Financial Transaction Tax

The application of a financial transaction tax on bond, equity and derivatives transactions in Europe continues to be intensely debated. On January 29th, the French government announced plans to impose a financial tax in France, irrespective of whether the European Union or any of its other member-states imposed their own tax. For a complete summary regarding this proposal, please click here.

 

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.

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