Here are some important Dodd-Frank rules that you need to keep in mind if you are neither a Swap Dealer nor a Major Swap Participant ("Non-SD/MSP").¹ 

Clearing
General Rule. Dodd-Frank requires all swaps listed in a clearing determination (see Clearing Determination below) by the Commodity Futures Trading Commission ("CFTC") to be centrally cleared through a Derivatives Clearing Organization (i.e., a clearinghouse), unless such swaps are subject to an exemption.

Clearing Determination. Unless otherwise exempt, a particular type of swap will be subject to mandatory clearing after publication of a final clearing determination by the CFTC that identifies such swap as subject to clearing. The CFTC made a final clearing determination for interest rate swaps and credit default swaps in November 2012. The CFTC has yet to finalize clearing determinations for other types of swaps, including commodity swaps.

End User Exception. A swap is not required to be cleared if one of the parties to the swap: (1) is not a financial entity; (2) is using swaps to hedge or mitigate commercial risk; and (3) notifies the CFTC or a Swap Data Repository ("SDR") how it generally meets its financial obligations associated with entering into non-cleared swaps.

• The final prong of the end user exception above requires that a counterparty to a swap report certain information to an SDR (e.g., DTCC, CME and ICE) or to the CFTC. The reporting party (i.e., SD, MSP or the more sophisticated swap counterparty) is responsible for reporting much of this information. In some cases, however, the reporting party may require the end user to make an annual filing to an SDR. The annual filing form, such as the one provided by DTCC, is relatively short and easy to complete.
• Board Approval. Reporting companies under the Securities Exchange Act of 1934 ("SEC Filers") must obtain approval from the appropriate committee of its board or governing body to enter into swaps that are exempt from the mandatory clearing and exchange-trading requirements of Dodd-Frank. If you are an SEC Filer (or an entity controlled by an SEC Filer) who wants to benefit from the end user exception, you must obtain this board approval (usually in the form of board resolutions). Furthermore, the board (or the appropriate committee of the board) must set appropriate policies for the use of uncleared swaps and review such policies on an annual basis (or more often when there is a change in the company's swap trading strategy, such as the implementation of a new hedging program).

Documentation Requirements
Many of the Dodd-Frank documentation requirements are addressed through protocols released by the International Swaps and Derivatives Association, Inc. ("ISDA"). A party can adhere to these ISDA protocols, and thus incorporate into their existing ISDA Agreements the documentation requirements mandated by Dodd-Frank, by following instructions in the Protocol Management section of the ISDA website (http://www2.isda.org/). Some parties may choose to comply with the Dodd-Frank documentation requirements by using the protocols prepared by the International Energy Credit Association or bespoke agreements prepared by their swap dealing counterparties.

Recordkeeping Requirements
Non-SD/MSP counterparties must keep full, complete, and systematic records, including all pertinent data and memoranda, with respect to each swap to which they are a counterparty (i) throughout the existence of a swap and (ii) for 5 years after termination or expiration of a swap. Records may be kept in either electronic or paper form, so long as they are retrievable, and information in them is reportable.

Legal Entity Indentifier (LEI)
Every party to a swap is required to have a legal entity identifier ("LEI") for reporting and recordkeeping purposes. If you have not done so already, register for an LEI (a.k.a., CICI and GMEI) at www.gmeiutility.org. If you have already registered for an LEI, make sure to keep it maintained from year to year.

On the Horizon
Position Limits. The CFTC has proposed position limits with respect to certain swaps. Companies should determine whether the swaps they trade are among those that may be subject to the proposed position limits rules in order to be better prepared once such rules are finalized and implemented.

Margin Rules. Bank regulators and the CFTC have also proposed mandatory margin and credit support requirements for non-cleared swaps. When the final rules are released and implemented, non-SDs/MSPs will at the very least be required to have credit support documentation in place with their counterparties. In some situations, non-SDs/MSPs will be required to post initial and variation margin to their counterparties.

¹ Please note that this is not intended to be an exhaustive overview of Dodd-Frank compliance matters.