CFTC Provides Relief from the Clearing Requirement for Swaps Entered into by Eligible Treasury Affiliates

On November 26, CFTC issued a no-action letter providing additional relief for eligible treasury affiliates that enter into swaps that are subject to the clearing requirement in section 2(h)(1) of the Commodity Exchange Act (CEA) and part 50 of the CFTC's regulations.  The no-action letter modifies relief that was previously issued for treasury affiliates on June 4, 2013 in CFTC No-Action Letter 13-22. "Eligible treasury affiliates" are entities that are wholly-owned by a non-financial parent company, and are "financial entities" under section 2(h)(7)(C)(i)(VIII) of the CEA because of the activities undertaken on behalf of its non-financial affiliates.  Among other changes, the no-action letter modifies the rules placed upon operations between a treasury affiliate and its affiliates and removes restrictions as to the number of financial affiliates that may be within a corporate group.  Release.  Letter.

Federal Reserve Board Seeks Public Comment on the Application of Enhanced Prudential Standards to General Electric Capital Corporation

On November 25, the Federal Reserve Board (the "Board") released proposed enhanced prudential standards and reporting requirements to be applied to General Electric Capital Corporation ("GECC") and requested public comment on the application thereof.  GECC is designated by the Financial Stability Oversight Counsel as a non-bank systemically important financial institution that needs to be supervised by the Board and be subject to enhanced prudential standards similar to those applicable to certain bank holding companies.  Release.

On November 28, DBRS released its general corporate methodology.  Release.

On November 28, DBRS released its methodology for rating companies in the gaming industry.  Release.

On November 26, DBRS released its methodology for rating Canadian trade receivables securitizations.  Release.

On November 26, Moody's released its methodology for rating construction industry.  Release.

On November 26, Moody's released its methodology for rating regulated electric and gas networks.  Release.

On November 26, Moody's released its methodology for rating tobacco industry.  Release.

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Detroit Confirms Chapter 9 Plan of Adjustment

Approximately 16 months after filing the largest chapter 9 bankruptcy in history, Detroit received approval November 7 of its chapter 9 plan of adjustment.  Bankruptcy Judge Stephen Rhodes of the Eastern District of Michigan Bankruptcy Court, confirmed the plan at a several-hour hearing where he read into the record an "oral opinion."  Judge Rhodes held that the plan "meets the legal requirements for confirmation" and lauded the plan, describing it as an "extraordinary accomplishment in bankruptcy and an ideal model for future municipal restructurings."  In re City of Detroit, Case No. 13-53846 (Bankr. E.D. Mich., November 7, 2014). Click here to read more.

Council of EU Agrees General Approach on Proposed Regulation on Securities Financing Transactions

On November 20, the Council of the EU published a press release reporting that its Permanent Representatives Committee (COREPER) has agreed its approach on a draft regulation on reporting and transparency of securities financing transactions (SFTs) (the SFT Regulation).

SFTs are often carried out by the shadow banking sector and rely on assets belonging to the counterparty to generate financing.  They mostly involve lending or borrowing of securities and commodities, repurchase or reverse repurchase transactions, or buyback/sell-back transactions.

The SFT Regulation is intended to enhance financial stability by ensuring that information on SFTs is efficiently reported to trade repositories and investors in collective investment undertakings.

The Commission published its legislative proposal for the SFT Regulation in January 2014 and the Council published its first compromise proposal in October 2014. The Council's agreement enables negotiations to commence as soon as the negotiating team of the European Parliament is entrusted with a mandate. The aim is to adopt the SFT Regulation at first reading. Press Release.

Financial Services and Markets Act 2000 (Market Abuse) Regulations 2014 Published

On November 20, the Financial Services and Markets Act 2000 (Market Abuse) Regulations 2014 were published with an accompanying explanatory memorandum.  The Regulations were made on November 19, and come into force on December 15.  They amend the Financial Services and Markets Act 2000 (FSMA) to extend until July 3, 2016 the expiry dates of:

• the prohibition on market manipulation (s118(8) FSMA);

• the associated provisions (s118A(2) and (3) FSMA); and
• the definition of "regular user" (s130A FSMA).

On July 3, 2016, the Market Abuse Regulation (MAR) will take effect and the above FSMA provisions will then expire.  The s118(8) prohibition will be replaced by a prohibition with similar scope under MAR.  Regulation.  Explanatory Memorandum.