On July 3, the Commodity Futures Trading Commission (CFTC) issued a final order to amend, for a second time, a temporary exemptive relief order that the CFTC issued on July 14, 2011, pertaining to the effective date for swap regulation (the July 14 Order).

Generally, the provisions of Title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the Dodd-Frank Act) were scheduled to become effective on July 16, 2011 – 360 days after the Dodd-Frank Act’s enactment. Recognizing that its rules to implement Title VII would not be finalized by this date, the CFTC issued the July 14 Order with the goal of providing regulatory certainty regarding Title VII’s applicability to market participants. In effect, the July 14 Order preserved the status quo for over-the-counter swaps until the earlier of the effective date of certain key final rules or December 31, 2011.

The CFTC amended the July 14 Order in December of last year to: (1) extend its sunset date to the earlier of the effective date of certain key final rules or July 16, 2012; and (2) account for the repeal and replacement of Part 35 of the CFTC’s rules, which governs agricultural swaps. The second amended July 14 Order: (1) extends the sunset date of the July 14 Order to the earlier of the issuance of certain final rules or December 31, 2012; (2) removes references to “swap dealers,” “major swap participants” and “eligible contract participants” in light of the issuance of final rules on April 18, 2012 to further define those terms; (3) stipulates that agricultural swaps may be cleared like any other types of swaps; and (4) removes references to a “Grandfather Order” for exempt commercial markets (ECM) and exempt boards of trade (EBOT).