On June 14, 2012, the Securities and Exchange Commission (SEC) published a proposed policy statement (the Policy Statement) in the Federal Register pertaining to the order in which its final rules to implement Title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the Dodd-Frank Act) should take effect. The primary responsibility of the SEC under Title VII relates to “security-based swaps,” though the SEC will, in many instances, share responsibilities with the Commodity Futures Trading Commission (CFTC).1 Specifically, although the Dodd-Frank Act granted the CFTC primary jurisdiction over swaps and the SEC primary jurisdiction over security-based swaps, both agencies are charged with adopting joint rules to further define, among other things, the terms “swap” and “security-based swap.” Such rules were proposed last year, but final rules have yet to be adopted. As a result, to the extent the SEC’s proposed timetable for finalizing its rules (including these definitions) differs from that of the CFTC, the effective date of other CFTC rules, as well as the definitions, will be impacted.

In the Policy Statement, the SEC emphasizes that it will implement a phased-in compliance schedule rather than issue all of its final rules simultaneously. Instead of setting specific timelines or concrete compliance dates, however, the Policy Statement only proposes the sequence in which the SEC’s final rules may take effect relative to each other. This phased-in schedule recognizes that the SEC’s final rules are interconnected and that certain of its rules are issued jointly with the CFTC and/or are dependent on rulemakings by federal banking regulators (so-called Prudential Regulators). The Policy Statement is intended to provide regulated entities with an adequate amount of time to comply with each final rule. The SEC seeks public comments on the Policy Statement, which comments must be submitted to the SEC by August 13, 2012 and will be addressed in the relevant rulemakings discussed in the Policy Statement.

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