The Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”) contains definitions for the new terms “swap dealer,” “security-based swap dealer,” “major swap participant” and “major security-based swap participant” (together, “Regulated Swap Entities”) and an amended definition for the term “eligible contract participant” (“ECP”). As directed by that statute, on April 18, 2012, the Commodity Futures Trading Commission (“CFTC”) and the Securities and Exchange Commission (“SEC”) (collectively, the “Commissions”) adopted a final rule (the “Final Rule”) that clarifies these Dodd-Frank Act definitions, particularly in terms of scope and applicability to market participants. The Final Rule revises proposed definitions published on December 21, 2010 (the “Proposed Rule”). In this Alert, we focus on the major differences between the Proposed Rule and the Final Rule.

The Final Rule will generally be effective July 23, 2012.[3] However, registration of Regulated Swap Entities will not be mandatory, and the substantive regulatory provisions applicable to them will not be enforced, until after the effective date of a joint final rule of the Commissions further defining the terms “swap” and “security-based swap.” That rule is commonly expected to be adopted sometime in the summer or fall of 2012.[4]

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