Financial Services Bulletin: Action at Several Federal Agencies


CFTC Proposes Order Exempting Certain Transactions of Regional Transmission Organizations and Independent System Operators

On Tuesday, August 21, 2012, the Commodity Futures Trading Commission (the "CFTC") ' approved a proposed order that would exempt certain specified transactions of Regional Transmission Organizations ("RTOs") and Independent System Operators ("ISOs") from certain provisions of the Commodity Exchange Act (the "CEA"), as amended by the Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Dodd-Frank Act"), and CFTC regulations. This order is in response to a petition from certain RTOs and ISOs that are subject to regulation by either the Federal Energy Regulatory Commission ("FERC") or the Public Utility Commission of Texas ("PUCT").

The proposed order would exempt the purchase or sale of specifically defined “financial transmission rights,” “energy transactions,” “forward capacity transactions,” and “reserve or regulation transactions” that are offered or sold in a market administered by one of the petitioning RTOs or ISOs pursuant to a protocol that has been approved or permitted to take effect by FERC or PUCT. The proposed order also would exempt persons offering, entering into, or rendering advice or other services with respect to those transactions.

To be eligible for the proposed exemption, the transactions would have to be entered into by persons who are “appropriate persons,” as defined in section 4(c)(3)(A) through (J) of the CEA or “eligible contract participants,” as defined in section 1a(18) of the CEA and CFTC regulation 1.3(m). Under the proposed order, the CFTC’s general anti-fraud, anti-manipulation, enforcement, and books and records inspection authorities will continue to apply. The proposed exemption also would be subject to, among other things, the continuation of information sharing arrangements between the CFTC and FERC, and between the CFTC and PUCT.

Read the CFTC press release

Read the CFTC rule

SEC Abandons Money Market Reform Proposal

On August 22, 2012, SEC Chair Mary Schapiro announced that the Commission would not consider a money market reform proposal that would have, among other changes, permitted a floating net asset value ("NAV") rather than a fixed NAV of $1.00. SEC Commissioners Aguilar, Gallagher and Paredes each also voiced opposition to the proposed money market reforms.

Read SEC Chair Schapiro's statement

Read Commissioner Aguilar's statement

Read Commissioners Gallagher's and Paredes's statement

SEC Adopts Conflict Mineral Rules

On Wednesday, August 22, 2012, the Securities and Exchange Commission (the "SEC") adopted a rule mandated by Section 1502 of the Dodd-Frank Act to require companies to publicly disclose their use of conflict minerals that originated in the Democratic Republic of the Congo or an adjoining country. Section 1502 directs the SEC to issue rules requiring certain companies to disclose their use of conflict minerals that include tantalum, tin, gold, or tungsten if those minerals are “necessary to the functionality or production of a product” manufactured by those companies. Companies are required to provide this disclosure on a new form to be filed with the SEC called Form SD.

Read the SEC press release

SEC Adopts Resource Extractor Government Payment Rules

On Wednesday, August 22, 2012, the SEC adopted rules mandated by Section 1504 of the Dodd-Frank Act requiring resource extraction issuers to disclose certain payments made to the U.S. government or foreign governments. Section 1504 directs the SEC to issue these rules requiring companies engaged in the development of oil, natural gas, or minerals to disclose the information annually by filing a new form with the SEC called Form SD.

Read the SEC press release

CFTC Approves Conforming Amendments to Regulations of Commodity Pool Operations and Commodity Trading Advisors

On Thursday, August 23, 2012, the CFTC approved final conforming amendments to Part 4 of its regulations, which govern the operations and activities of commodity pool operators ("CPOs") and commodity trading advisors ("CTAs"). These amendments reflect changes made to the CEA by Title VII of the Dodd-Frank Act.

Title VII broadened the CPO and CTA definitions in the CEA to include swap-related activity. The final amendments conform Part 4 to these changes by requiring CPOs and CTAs to include information on swap intermediaries and activities under the disclosure, reporting and recordkeeping requirements of Part 4. Under these final regulations, CPOs and CTA will be subject to the same regulatory structure for both their futures and swaps activities

Read the CFTC press release

CFTC Issues Final Rules Establishing Swap Dealer and Major Swap Participant Requirements for Swap Trading Relationship Documentation, Swap Confirmation, Reconciliation and Compression of Swap Portfolios

On Monday, August 27, 2012, the CFTC approved final rules to improve the risk management procedures of swap dealers and major swap participants. These rules are adopted pursuant to Section 4s(i) of the CEA, enacted by Section 731 of the Dodd-Frank Act. Section 731 requires the CFTC to prescribe standards for swap dealers and major swap participants related to the timely and accurate confirmation, processing, netting, documentation, and valuation of swaps.

Read the CFTC press release

OCC, FDIC, and Fed Consider Delay in the Implementing Timeline for Annual Stress Testing

On Monday, August 27, 2012, the Office of the Comptroller of the Currency, the Federal Reserve Board, and the Federal Deposit Insurance Corporation each separately announced they are considering changes to the implementation timeline for the company-run stress testing required by Section 165 of the Dodd-Frank Act. The changes under consideration would delay implementation until September 2013 for covered institutions with total consolidated assets between $10 billion and $50 billion.

Read the OCC press release

Read the Fed press release

Read the FDIC press release

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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