Extension of Certain Dodd-Frank No-Action Relief
The CFTC recently established a phased compliance timeline for the implementation of the execution requirement currently applicable to certain interest rate swaps and credit default swaps executed as part of a "package transaction." It also recently issued a no-action letter further delaying an advisory regarding the applicability of certain Dodd-Frank requirements in connection with activities that occur in the United States.
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CFTC Establishes Expedited Process for Relief for Certain Delegating CPOs
On May 12, 2014, the CFTC issued guidance establishing the circumstances under which it intends to provide registration no-action relief through a streamlined process where a "commodity pool operator" has delegated investment management authority with respect to a commodity pool to another person registered as a CPO. The CFTC included a form of request for no-action relief, which provides for certifications and acknowledgements to be made by both the delegating and designated CPOs regarding the criteria for relief.
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Collateral Segregation Notices for Uncleared Swaps
As required by a final rule issued by the CFTC last year, registered swap dealers have begun to notify counterparties prior to the execution of uncleared swaps that counterparties may require the segregation of any initial margin.
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NYS Bar Association Tax Session Issues Report on Section 871(m) Regulations
On May 20, 2014, the New York State Bar Association Tax Session issued a Report on Proposed Regulations under Section 871(m) of the Internal Revenue Code of 1986. The report, which was co-authored by Orrick partner Peter J. Connors, addresses proposed regulations that the IRS issued in December 2013 concerning withholding on equity-linked financial instruments which reference U.S. stocks.
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ISDA Publishes Section 2(a)(iii) Form of Amendment
In June 2014, ISDA published a form of amendment relating to Section 2(a)(iii) of the preprinted form of ISDA Master Agreement. Section 2(a)(iii) generally permits a contracting party to withhold performance indefinitely if an event of default or potential event of default has occurred and is continuing (or an early termination date has been designated) with respect to its counterparty.
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