Financial Services Bulletin: Action at the SEC, DC Circuit Court, and the CFTC


SEC Proposes Security-Based Swap Rules

On Wednesday, October 17, 2012, the Securities and Exchange Commission (the "SEC") voted unanimously to propose capital, margin, and segregation requirements for security-based swap dealers and major security-based swap participants.  The rules are proposed pursuant to Title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Dodd-Frank Act"), which authorizes the SEC and other regulators to put in place a comprehensive framework for regulating the over-the-counter swaps markets.

Under the Dodd-Frank Act, the SEC must impose margin and capital requirements to help ensure the safety and soundness of security-based swap dealers and major security-based swap participants.  The margin rules are required to be appropriate for the risk associated with security-based swaps that are not “cleared” by a security-based swap clearing agency.  The proposed segregation rules are intended to facilitate the prompt return of customer property to customers before or during a liquidation proceeding if a security-based swap dealer fails.

Read the SEC press release

Court Challenge Filed to the SEC's "Conflict Mineral" Rules

On Friday, October 19, 2012, the U.S. Chamber of Commerce and the National Association of Manufacturers filed a challenge to the SEC's "Conflict Mineral" rules in the U.S. Court of Appeals for the District of Columbia Circuit.  Adopted pursuant to Section 1502 of the Dodd-Frank Act, the rules require U.S. public companies that sell products manufactured with any tantalum, tin, gold, or tungsten to disclose annually whether any of those minerals originated in the Democratic Republic of the Congo or an adjoining country.

The rules are set to be effective November 12, 2012.  However, this may be delayed as the D.C. Circuit court scheduled a November 21 deadline for procedural motions and said it would defer substantive briefings pending further orders of the court.

Read the Wall Street Journal Corruption Currents Blog article

Read the Bloomberg article


CFTC Proposes Security-Based Swap Rules

On Monday, October 22, 2012, the Commodity Futures Trading Commission (the "CFTC") issued final Interpretative Guidance to, under certain circumstances, exempt foreign regulators from the indemnification and confidentiality provisions of the Commodity Exchange Act pursuant to Section 752 of the Dodd-Frank Act.  This exemption applies generally to data that is reported pursuant to foreign law and if the swap data repository is registered, recognized, or otherwise authorized by the country’s law and regulation.

Read the CFTC press release

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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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