Earlier today the Commodity Futures Trading Commission (CFTC) published a pre-publication version of the joint CFTC and Securities and Exchange Commission final rules to further define, among other things, the terms “swap” and “security-based swap” (the Final Rules). As noted in a Legal Alert that was circulated earlier this week following their adoption, the Final Rules serve to clarify the scope of the “swap” and “security-based swap” definitions with respect to, among other things, insurance, consumer and commercial transactions, and foreign exchange (FX) swaps and forwards. The Final Rules also provide guidance with respect to the forward exclusion from the swap definition for nonfinancial commodities and clarify the relationship between swaps and security-based swaps.

The effective date of the Final Rules, which will be 60 days after the publication of the Final Rules in the Federal Register, will trigger the effective dates of a number of final CFTC rules, including those with respect to swap dealer and major swap participant registration, external and internal business conduct standards, recordkeeping and reporting requirements, and position limits. Publication of the Final Rules is expected to occur in the next few weeks. As a result, market participants should anticipate having to comply with certain of the new Dodd-Frank Act regulatory requirements as early as this fall.