Orrick Derivatives Month in Review - October 12, 2011


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 21, 2010 and is generally intended to bring the $600 trillion over-the-counter derivatives market under greater regulation. For a summary of certain noteworthy developments in its implementation since our last update, please click here.


IRS Issues Proposed Regulations Addressing CDS and Section 1256 Swap Exclusion

On  September 15th, the U.S. Treasury Department issued proposed regulations that would add credit default swaps and non-financial index derivatives to a revised definition of "notional principal contracts." The proposed regulations also provide guidance on the definition of swaps and similar agreements within the meaning of section 1256(b)(2)(B) of the Internal Revenue Code of 1986. For a complete description of the proposed regulations in a recent Orrick Client Alert, please click here.


Europe Proposes Financial Transaction Tax

On September 28th, the European Commission proposed the introduction of a plan to tax derivatives and other financial transactions each time at least one of the parties to a transaction is located within the 27 member-state European Union. For a complete summary, please click here.


Italian Court Orders Disclosure of Swap Settlement

In late September, an Italian court ordered the disclosure of the terms of a settlement relating to an interest rate swap between the city of Cassino and J.P. Morgan Chase & Co., notwithstanding a confidentiality provision in the settlement agreement between the parties. For a complete summary, please click here.


Federal Reserve Bank Publishes Report on CDS Market

On September 27th, the Federal Reserve Bank of New York published a staff report analyzing three months of global credit default swap transaction information. Among other things, this report was intended to contribute to the development of public reporting requirements and data collection in connection with financial reform efforts. For a complete summary, 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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