"Prudential Regulators Finalize Margin Requirements for Non-Cleared Swaps"

by Skadden, Arps, Slate, Meagher & Flom LLP
Contact

Federal banking regulators (Prudential Regulators)1 have finalized much-anticipated rules (Final Rules)2 relating to initial and variation margin requirements for certain swaps and security-based swaps that are not centrally cleared through a registered derivatives clearing organization or a registered clearing agency (such swaps, “non-cleared swaps”).3 Subject to certain exemptions, the Final Rules will apply to a non-cleared swap where at least one counterparty to the trade is both (1) registered either with the Commodity Futures Trading Commission (CFTC) as a swap dealer or major swap participant, or with the Securities and Exchange Commission (SEC) as a security-based swap dealer or major security-based swap participant (swap entity) and (2) subject to regulation by at least one of the Prudential Regulators (such a counterparty, a covered swap entity or CSE).4 The Final Rules implement a staggered compliance schedule beginning on September 1, 2016, and would not apply to non-cleared swaps entered into prior to their specified compliance dates unless those swaps are rolled over or renewed after the relevant compliance dates.

The Final Rules will require covered swap entities to post and collect minimum initial and variation margin amounts for non-cleared swaps with many of their counterparties. In adopting the Final Rules, the Prudential Regulators reaffirmed their policy objective in the 2014 rule proposal (2014 Proposal)5 that the posting and collection of margin should reduce buildups of large unsecured derivatives positions that can adversely affect financial stability. Like the 2014 Proposal, the Final Rules also take into account the risk posed by a covered swap entity’s different types of counterparties in establishing the minimum margin requirements.

Although the Final Rules retain the general spirit and risk-based approach of the 2014 Proposal, they include a number of changes that the Prudential Regulators believe will reduce burdens on market participants. Among the more significant of these changes are:

  • excluding from all margin requirements certain non-cleared swaps with commercial end users and small financial institutions;6
  • increasing the annual swap activity threshold for financial end users (referred to as “material swaps exposure”) that would trigger initial margin requirements with respect to those entities;
  • expanding the types of collateral eligible to be used for initial and variation margin;
  • aligning the “affiliate” definition (relevant to several parts of the Final Rules) with accounting consolidation standards rather than a “control” concept; and
  • including special rules for non-cleared swaps between covered swap entities and their affiliates.

This client alert summarizes key aspects of the Final Rules and some of the differences from the 2014 Proposal. See chart of the significant requirements in the Final Rules, organized by counterparty category.

I. Margin Counterparty Categories

The Final Rules acknowledge that different types of counterparties pose different levels of risk to the financial system. Accordingly, the Final Rules adopt a risk-based approach to margin requirements for different types of counterparties — specifically, swap entities, financial end users with material swaps exposure and other counterparties including financial end users without material swap exposure. Unlike the 2014 Proposal, however, the Final Rules also include exemptions from all margin requirements for certain swaps with commercial end users and small financial institutions and include special provisions for a CSE’s inter-affiliate swaps.

A. Counterparty Category 1: CSE to Another Swap Entity

For swaps with other swap entities (including other CSEs), a CSE will be required to post initial margin7 and daily variation margin to, and collect initial and variation margin from, the swap entity counterparty.

B. Counterparty Category 2: CSE to Financial End User with Material Swaps Exposure

A CSE will be required to post initial margin8 and daily variation margin to, and collect initial margin and daily variation margin from, financial end users with material swaps exposures.

The Final Rules’ definition of “financial end user” is similar to the proposed definition and, according to the Prudential Regulators, “is broad by design.”9 A financial end user will have “material swaps exposure” when the financial end user and its affiliates had an average daily aggregate notional amount of non-cleared swaps, non-cleared security based swaps, foreign exchange forwards and foreign exchange swaps10 with all counterparties during June, July and August of the previous calendar year that exceeded $8 billion. In other words, a financial end user’s material swaps exposure calculation based on its June, July and August exposure in a calendar year determines whether the financial end user will be deemed to have a material swaps exposure for the entire next calendar year.11 The Prudential Regulators increased the material swaps exposure threshold from the proposed $3 billion to $8 billion largely to be consistent with international standards.12 Additionally, the Final Rules clarify that in calculating material swaps exposure, a swap between a financial end user and its affiliate (i.e., an inter-affiliate swap) should be counted only one time (i.e., either by the financial end user or the affiliate) and a swap that is otherwise subject to an exemption should not be counted (see Section D below).13

C. Counterparty Category 3: CSE to Other Counterparty

The Final Rules impose more nuanced margin requirements on CSEs with respect to swaps with “Other Counterparties.” “Other Counterparties” are counterparties that are not swap entities or financial end users with material swaps exposure. Other Counterparties include sovereigns, multilateral development banks, the Bank for International Settlements, commercial end users and financial end users without material swaps exposure. Note, however, that certain swaps between a CSE and a commercial end user or small financial institution are subject to an exemption from any of the new margin requirements, as discussed below. For those swaps with Other Counterparties that are not subject to an exemption, a CSE will be subject to the following requirements:

  • Where the CSE faces any Other Counterparty except for a financial end user without material swaps exposure, a CSE only will be required to collect initial margin and variation margin at such times and in such forms and such amounts that the CSE determines appropriately addresses the credit risk posed by the counterparty and the risk of the swap. This could result in the CSE determining not to collect any initial margin or variation margin from the Other Counterparty. There will be no requirement that a CSE post initial margin or variation margin to the Other Counterparty.
  • Where the CSE faces an Other Counterparty that is a financial end user without material swaps exposure, a CSE will have discretion to collection initial margin but must collect and post variation margin. Thus, daily variation margin will be required for swaps with all financial end users.

D. Certain Swaps Between a CSE and a Commercial End User or Small Financial Institution

As required by the Terrorism Risk Insurance Program Reauthorization Act of 2015 (TRIPRA), the Prudential Regulators have adopted the IFR Exemptions that will exempt from the Final Rules’ margin requirements: (1) swaps with commercial end users that are entered into for hedging purposes and (2) swaps with a financial institution with total assets of $10 billion or less if the institution uses the swap to hedge commercial risk. In the preamble to the Final Rules, the Prudential Regulators emphasized that the exemption is transaction-based, as opposed to counterparty-based. Thus, for example, if a commercial end user enters into a non-cleared swap with a CSE and the transaction is not for hedging purposes, then the swap would not be exempt and the CSE would treat the swap in accordance with the Other Counterparties requirements discussed above.

E. Swaps Between a CSE and an Affiliate

In response to numerous concerns raised by commenters, the Final Rules include special provisions for swaps between a CSE and an affiliate. The Prudential Regulators also modified the term “affiliate,” which is used not only in the inter-affiliate swap provisions described below, but also in the conditions for third-party custodians holding segregated collateral, in the definitions of “material swaps exposure” and initial margin threshold amount, and in determining the compliance dates. This new affiliate definition uses financial accounting standards as a trigger for affiliation. Instead of the proposed legal control test that concerned a number of commenters, the Final Rules generally determine affiliate status based on whether and how a company is or would be consolidated with another company on financial statements prepared in accordance with U.S. Generally Accepted Accounting Principles, the International Financial Reporting Standards or other similar standards.14

While a CSE still will be required to collect initial margin from an affiliate that is either a swap entity or financial end user with material swaps exposure, the CSE will not be required to post initial margin to any affiliate other than another Covered Swap Entity. However, with respect to an affiliate who is a financial end user with material swaps exposure, the CSE will be required to calculate the amount of initial margin that would be required to be posted to such affiliate and provide documentation of that amount to the affiliate on a daily basis. A CSE will be required to collect daily variation margin from, and post daily variation margin to, any affiliate counterparty that is a swap entity or financial end user.

II. Calculation of Margin Amounts

A. Initial Margin Calculation

Like the 2014 Proposal, the Final Rules set forth two alternative methods for calculating initial margin: (1) a standardized margin schedule attached to the Final Rules that expresses initial margin as a percentage of the notional amount of the swap or (2) an internal initial margin model approved by the relevant Prudential Regulator. The standardized margin approach allows for the recognition of risk offsets through the use of a net-to-gross ratio in cases where a portfolio of non-cleared swaps is executed under an eligible master netting agreement15 (EMNA) (e.g., an ISDA). All non-cleared swaps subject to the same EMNA and subject to the Final Rules’ requirements can be netted against each other across asset classes in the calculation of the standardized margin net-to-gross ratio. In contrast, the internal model approach only allows for portfolio offsets for swaps within the same asset class — commodities, credit, equity, or foreign exchange/interest rate (as a single asset class) — that are governed by the same EMNA.

B. Variation Margin Calculation

Variation margin will be equal to the change in value of the swap since the counterparties’ previous exchange of variation margin, calculated on at least a daily basis. A CSE could calculate variation margin on an aggregate net basis for swaps governed by an EMNA.16

III. Maximum Initial Margin Threshold and Minimum Transfer Amount

The Final Rules permit a covered swap entity to adopt a maximum initial margin threshold of $50 million,17 below which it need not collect or post initial margin from or to swap entities and financial end users with material swaps exposures. The Prudential Regulators lowered the maximum initial margin threshold from the proposed $65 million to $50 million to align the U.S. dollar-denominated numerical amounts in the Final Rules with those in the 2013 framework and to be consistent with amounts that have been proposed in margin rules by the European and Japanese authorities. Under the special provisions for inter-affiliate swaps, each affiliate facing a CSE may be granted an initial margin threshold of $20 million.

Like the 2014 Proposal, the Final Rules do not permit a CSE to adopt a threshold amount below which it need not post or collect variation margin on swaps with swap entities or financial end users. However, the Final Rules allow for a minimum transfer amount, such that a CSE is not required to collect or post any margin from or to any individual counterparty unless and until the combined amount of initial and variation margin that must be collected or posted under the Final Rules (but has not yet been exchanged with the counterparty) is greater than $500,000. The Prudential Regulators explained that the minimum transfer amount is meant to generally alleviate the operational burdens associated with making de minimis margin transfers.

IV. Types of Eligible Collateral

The Final Rules expand the list of types of collateral that are eligible to be used to satisfy initial and variation margin requirements.

For initial margin, the Final Rules added to the 2014 Proposal’s list of types of eligible collateral interests in pooled investment funds that invest either in U.S. government securities or in securities issued by the European Central Bank or a sovereign entity that is assigned no higher than a 20 percent risk weight under the capital rules applicable to the covered swap entity. The other types of eligible collateral for initial margin, carried over from the 2014 Proposal, are: cash; certain assets expected to remain highly liquid during a period of financial stress (such as debt securities issued or guaranteed by the U.S. Department of Treasury or another U.S. government agency, the Bank for International Settlements, the International Monetary Fund, the European Central Bank or multilateral development banks); U.S. government-sponsored enterprises’ debt securities; certain foreign government debt securities; certain corporate debt securities; certain listed equities; and gold. Given that CSEs have discretion to collect and post initial margin for swaps with Other Counterparties, the Final Rules allow a CSE to collect or post initial margin in any form of collateral for such swaps.

For variation margin, the Final Rules greatly expand the scope of eligible collateral types for swaps with a financial end user. Rather than being restricted to using cash (denominated in U.S. dollars or the currency of settlement), as the 2014 Proposal would have required, a CSE and financial end user will be able to exchange funds denominated in any major currency as well as use the types of non-cash collateral that are eligible for initial margin requirements. The expansion of eligible collateral types for variation margin does not apply to swaps between a CSE and another swap entity, as the only permissible eligible collateral for variation margin for a CSE’s swaps with another swap entity is immediately available cash funds denominated in U.S. dollars or the currency of settlement. For swaps between CSEs and Other Counterparties (except for financial end users), the CSE has discretion to collect and post variation margin and may use any form of collateral for the variation margin.

With respect to both initial margin and variation margin requirements, non-cash collateral permitted under the Final Rules will be subject to additional “haircuts” or discounts as set forth in Appendix B of the Final Rules.18

V. Segregation of Collateral

Like the 2014 Proposal, the Final Rules require that any collateral (other than collateral for variation margin) that a CSE posts (including collateral in excess of what is required under the Final Rules) must be segregated at one or more custodians that are not affiliates of the CSE or the counterparty (a third-party custodian). Furthermore, consistent with the 2014 Proposal, a CSE will be required to place the initial margin it collects from a swap entity or financial end user with material swaps exposure at a third-party custodian. For swaps between a CSE and its affiliates, however, the Final Rules allow the CSE to serve as the custodian for non-cash collateral that the CSE collects from an affiliate or to have an affiliate of the CSE serve as the custodian for that collateral. Where a third-party custodian is required, the custodial agreement between the CSE and third-party custodian must prohibit rehypothecation, although substitutions and reinvestments are allowed under certain specified circumstances. A CSE will not be required to segregate the initial margin it collects from Other Counterparties, and there will be no segregation requirements for variation margin with respect to any counterparty. Nevertheless, even where the segregation requirements do not apply, the Final Rules do not preclude parties from using a third-party custodian.

VI. Documentation of Margin Matters

A CSE is required to execute trading documentation that grants the CSE the contractual right to collect margin in amounts and under the circumstances necessary to meet the Final Rules’ requirements, details the procedures for determining the value of each swap for variation margin purposes and the procedures for calculating initial margin, and provides valuation dispute procedures.

VII. Cross-Border Application of Margin Requirements

Like the 2014 Proposal, the Final Rules specify how the margin requirements will be applied in a cross-border context. An exemption from the margin requirements will apply to swaps between foreign CSEs and foreign counterparties, provided that no U.S. entity guarantees either party’s obligations under such swaps. Swaps not subject to this total exemption (e.g., swaps between a foreign CSE and a U.S. counterparty) may be eligible for substituted compliance whereby the CSE could satisfy the requirements in the Final Rules by complying with the requirements of its home jurisdiction. For substituted compliance to apply, the Prudential Regulators would need to determine that the foreign jurisdiction’s requirements are comparable to those in the Final Rules. Notably, swaps transacted by U.S. CSEs, including swaps transacted out of foreign branches of U.S. CSEs, would not be eligible for substituted compliance.19 Finally, there are special rules for swaps with a counterparty located in a jurisdiction where inherent limitations in the legal or operational infrastructure make it impracticable for the CSE and counterparty to post initial margin in compliance with the Final Rules.

VIII. Compliance Dates

The compliance timetable in the Final Rules pushes further out the 2014 Proposal’s compliance dates (which would have begun on December 15, 2015). Under the Final Rules, initial margin requirements will be phased in between September 1, 2016, and September 1, 2020, depending on the average daily notional amount of non-cleared swaps, non-cleared security-based swaps, foreign exchange forwards, and foreign exchange swaps of the CSE (combined with its affiliates) and the CSE’s counterparty (combined with its affiliates) for each business day during March, April and May of that year. Starting on September 1, 2016, variation margin requirements will apply to large CSEs (i.e., where both the CSE combined with its affiliates and the CSE’s counterparty combined with its affiliates have an average daily aggregate notional amount of non-cleared swaps, non-cleared security-based swaps, foreign exchange forwards and foreign exchange swaps for March, April and May of 2016 that exceeds $3 trillion). Variation margin requirements will apply to all remaining CSEs starting on March 1, 2017. Although non-cleared swaps entered into prior to these compliance dates will not be subject to the relevant margin requirements, a novation or amendment after one of the compliance dates could trigger the relevant margin requirement for the swap.

The Prudential Regulators have recognized that CSEs will be making operational and legal changes to their current swaps business operations in order to comply with the new margin requirements, including potential changes to internal risk management and other systems, trading documentation, collateral arrangements, and operational and technology infrastructure. As the impact of the Final Rules extends well beyond CSEs and swap entities, financial end users and Other Counterparties that are swap counterparties to CSEs also may need to review their operations and legal documentation and make adjustments to prepare them for posting and collecting margin on non-cleared swaps next year and in the coming years.20

___________________

1 The Prudential Regulators consist of the Office of the Comptroller of the Currency (OCC), the Board of Governors of the Federal Reserve System (Fed), the Federal Deposit Insurance Corporation (FDIC), the Farm Credit Administration and the Federal Housing Finance Agency. To date, the OCC, Fed and FDIC have all voted to approve the Final Rules.

2 See “Margin and Capital Requirements for Covered Swap Entities,” available at https://www.fdic.gov/news/board/2015/2015-10-22_notice_dis_a_fr_final-rule.pdf. The Final Rules incorporate by reference an interim final rule (IFR) concurrently adopted by the Prudential Regulators that will exempt commercial end-users and certain small financial institutions from all non-cleared margin requirements under the Final Rules. See “Margin and Capital Requirements for Covered Swap Entities,” available at https://www.fdic.gov/news/board/2015/2015-10-22_notice_dis_a_fr_interim-final-rule.pdf (“IFR Exemptions”).

3 The Final Rules, though titled “Margin and Capital Requirements for Covered Swap Entities,” do not adopt new capital requirements, but instead require a covered swap entity to comply with regulatory capital rules already made applicable to that covered swap entity as part of its prudential regulatory regime.

4 The CFTC and SEC separately proposed non-cleared margin requirements that would apply to swap entities regulated by each respective agency that are not covered swap entities. See “Margin Requirements for Uncleared Swaps for Swap Dealers and Major Swap Participants,” 79 Fed. Reg. 59898 (proposed October 3, 2014); “Capital, Margin, and Segregation Requirements for Security-Based Swap Dealers and Major Security-Based Swap Participants and Capital Requirements for Broker-Dealers, Proposed Rule, 77 Fed. Reg. 70213” (proposed November 23, 2012). These requirements have not yet been finalized.

5 See“Margin and Capital Requirements for Covered Swap Entities,” 79 Fed. Reg. 57348 (proposed September 24, 2014).

6 The provisions codifying these exemptions are subject to final approval after a public comment period scheduled to close on January 31, 2016.

7 If changes in portfolio composition or any other factors result in a change in the required initial margin amounts for any swap for which initial margin is required, a CSE will be required to post or collect additional initial margin, which could be as often as daily.

8 See supra note 7.

9 Under the Final Rules, the term financial end user includes: nonbank financial institutions supervised by the Board of Governors of the Federal Reserve System, depository institutions, foreign banks, state-licensed or registered credit or lending entities (but excluding entities registered or licensed solely on account of financing the entity’s direct sales of goods or services to customers), broker-dealers, floor brokers, floor traders, introducing brokers, registered investment companies, business development companies, private funds, securitization vehicles, commodity pools, commodity pool operators, employee benefit plans, insurance companies, cooperatives that are financial institutions, U.S. intermediate holding companies established or designated for purposes of compliance with Regulation YY of the Board of Governors of the Federal Reserve System, and entities that are or would be a financial end user or swap entity if they were organized under the laws of the U.S. or any state.

10 In 2012, the secretary of the Treasury made a determination that physically settled foreign exchange forwards and foreign exchange swaps are not to be considered swaps under the Dodd-Frank Act. See “Determination of Foreign Exchange Swaps and Foreign Exchange Forwards Under the Commodity Exchange Act,” 77 Fed. Reg. 69694 (November 20, 2012). Although non-cleared margin requirements under the Final Rules do not apply to foreign exchange forward and foreign exchange swap transactions, foreign exchange forwards and foreign exchange swaps exposure will be relevant for determining material swaps exposure and compliance dates.

11 Unlike the 2014 Proposal, the Final Rules provide specifics on how initial margin requirements can change where a financial end user with material swaps exposure becomes a financial end user without material swaps exposure, and vice versa. Depending on several timing parameters, a CSE will not be required to exchange initial margin for any new or existing non-cleared swap with a financial end user whose swaps exposure changes from material in one year to non-material in the next year. Conversely and also depending on timing parameters, a CSE will be required to exchange initial margin for new swaps with a financial end user whose swaps exposure changes from non-material in one year to material in the next year. The Final Rules also address a change in status of other swap counterparties of a CSE (e.g., an entity’s status changes from not being a swap entity to being a swap entity).

12 The Basel Committee on Banking Supervision (BCBS) and the Board of the International Organization of Securities Commissions (“IOSCO) developed an international framework for non-cleared margin requirements which called for a material swaps exposure threshold of €8 billion. See BCBS and IOSCO “Margin requirements for non-centrally cleared derivatives,” (September 2013), available at https://www.bis.org/publ/bcbs261.pdf.

13 A CSE may rely in good faith on reasonable representations of its counterparties in assessing whether it is transacting with a financial end user with material swaps exposure.

14 Alternatively, under the Final Rules, a company will be considered an affiliate of another company if the relevant Prudential Regulator concludes that either company provides significant support to, or is materially subject to the risks of losses of, the other company.

15 An eligible master netting agreement is a master netting agreement that meets certain conditions as detailed in the Final Rules. These conditions include, but are not limited to, requirements with respect to the CSE’s right to terminate the contract and liquidate collateral.

16 Swaps entered into before the applicable compliance date that are subject to the master netting agreement would need to be included in the aggregate calculation.

17 The $50 million threshold represents the aggregate credit exposure resulting from all non-cleared swaps and non-cleared security-based swaps between a covered swap entity and its affiliates and a counterparty and its affiliates. Thus, the threshold would be calculated on a consolidated entity basis.

18 The limits on eligible collateral and application of a haircut would not apply to margin collected in excess of what is required by the Final Rules.

19 A CSE would, however, be permitted to calculate the amount of initial margin it must post to its counterparty pursuant to the host jurisdiction’s requirements if that jurisdiction’s requirements are determined to be comparable.

20 The International Swaps and Derivatives Association (ISDA) has undertaken efforts to facilitate such changes by developing a standardized initial margin model to be used by CSEs. ISDA also is working to revise standard collateral documentation to be compliant with the Final Rules and is developing and defining standard business and technology practices for margin calculations, notifications, and settlement, collateral eligibility and segregation. See “ISDA Statement on the Revised Implementation Date for Non-Cleared Derivatives Margin Rules,” http://www2.isda.org/news/isda-statement-on-the-revised-implementation-date-for-non-cleared-derivatives-margin-rules (March 18, 2015).

Download PDF

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Skadden, Arps, Slate, Meagher & Flom LLP | Attorney Advertising

Written by:

Skadden, Arps, Slate, Meagher & Flom LLP
Contact
more
less

Skadden, Arps, Slate, Meagher & Flom LLP on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
- hide

JD Supra Privacy Policy

Updated: May 25, 2018:

JD Supra is a legal publishing service that connects experts and their content with broader audiences of professionals, journalists and associations.

This Privacy Policy describes how JD Supra, LLC ("JD Supra" or "we," "us," or "our") collects, uses and shares personal data collected from visitors to our website (located at www.jdsupra.com) (our "Website") who view only publicly-available content as well as subscribers to our services (such as our email digests or author tools)(our "Services"). By using our Website and registering for one of our Services, you are agreeing to the terms of this Privacy Policy.

Please note that if you subscribe to one of our Services, you can make choices about how we collect, use and share your information through our Privacy Center under the "My Account" dashboard (available if you are logged into your JD Supra account).

Collection of Information

Registration Information. When you register with JD Supra for our Website and Services, either as an author or as a subscriber, you will be asked to provide identifying information to create your JD Supra account ("Registration Data"), such as your:

  • Email
  • First Name
  • Last Name
  • Company Name
  • Company Industry
  • Title
  • Country

Other Information: We also collect other information you may voluntarily provide. This may include content you provide for publication. We may also receive your communications with others through our Website and Services (such as contacting an author through our Website) or communications directly with us (such as through email, feedback or other forms or social media). If you are a subscribed user, we will also collect your user preferences, such as the types of articles you would like to read.

Information from third parties (such as, from your employer or LinkedIn): We may also receive information about you from third party sources. For example, your employer may provide your information to us, such as in connection with an article submitted by your employer for publication. If you choose to use LinkedIn to subscribe to our Website and Services, we also collect information related to your LinkedIn account and profile.

Your interactions with our Website and Services: As is true of most websites, we gather certain information automatically. This information includes IP addresses, browser type, Internet service provider (ISP), referring/exit pages, operating system, date/time stamp and clickstream data. We use this information to analyze trends, to administer the Website and our Services, to improve the content and performance of our Website and Services, and to track users' movements around the site. We may also link this automatically-collected data to personal information, for example, to inform authors about who has read their articles. Some of this data is collected through information sent by your web browser. We also use cookies and other tracking technologies to collect this information. To learn more about cookies and other tracking technologies that JD Supra may use on our Website and Services please see our "Cookies Guide" page.

How do we use this information?

We use the information and data we collect principally in order to provide our Website and Services. More specifically, we may use your personal information to:

  • Operate our Website and Services and publish content;
  • Distribute content to you in accordance with your preferences as well as to provide other notifications to you (for example, updates about our policies and terms);
  • Measure readership and usage of the Website and Services;
  • Communicate with you regarding your questions and requests;
  • Authenticate users and to provide for the safety and security of our Website and Services;
  • Conduct research and similar activities to improve our Website and Services; and
  • Comply with our legal and regulatory responsibilities and to enforce our rights.

How is your information shared?

  • Content and other public information (such as an author profile) is shared on our Website and Services, including via email digests and social media feeds, and is accessible to the general public.
  • If you choose to use our Website and Services to communicate directly with a company or individual, such communication may be shared accordingly.
  • Readership information is provided to publishing law firms and authors of content to give them insight into their readership and to help them to improve their content.
  • Our Website may offer you the opportunity to share information through our Website, such as through Facebook's "Like" or Twitter's "Tweet" button. We offer this functionality to help generate interest in our Website and content and to permit you to recommend content to your contacts. You should be aware that sharing through such functionality may result in information being collected by the applicable social media network and possibly being made publicly available (for example, through a search engine). Any such information collection would be subject to such third party social media network's privacy policy.
  • Your information may also be shared to parties who support our business, such as professional advisors as well as web-hosting providers, analytics providers and other information technology providers.
  • Any court, governmental authority, law enforcement agency or other third party where we believe disclosure is necessary to comply with a legal or regulatory obligation, or otherwise to protect our rights, the rights of any third party or individuals' personal safety, or to detect, prevent, or otherwise address fraud, security or safety issues.
  • To our affiliated entities and in connection with the sale, assignment or other transfer of our company or our business.

How We Protect Your Information

JD Supra takes reasonable and appropriate precautions to insure that user information is protected from loss, misuse and unauthorized access, disclosure, alteration and destruction. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. You should keep in mind that no Internet transmission is ever 100% secure or error-free. Where you use log-in credentials (usernames, passwords) on our Website, please remember that it is your responsibility to safeguard them. If you believe that your log-in credentials have been compromised, please contact us at privacy@jdsupra.com.

Children's Information

Our Website and Services are not directed at children under the age of 16 and we do not knowingly collect personal information from children under the age of 16 through our Website and/or Services. If you have reason to believe that a child under the age of 16 has provided personal information to us, please contact us, and we will endeavor to delete that information from our databases.

Links to Other Websites

Our Website and Services may contain links to other websites. The operators of such other websites may collect information about you, including through cookies or other technologies. If you are using our Website or Services and click a link to another site, you will leave our Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We are not responsible for the data collection and use practices of such other sites. This Policy applies solely to the information collected in connection with your use of our Website and Services and does not apply to any practices conducted offline or in connection with any other websites.

Information for EU and Swiss Residents

JD Supra's principal place of business is in the United States. By subscribing to our website, you expressly consent to your information being processed in the United States.

  • Our Legal Basis for Processing: Generally, we rely on our legitimate interests in order to process your personal information. For example, we rely on this legal ground if we use your personal information to manage your Registration Data and administer our relationship with you; to deliver our Website and Services; understand and improve our Website and Services; report reader analytics to our authors; to personalize your experience on our Website and Services; and where necessary to protect or defend our or another's rights or property, or to detect, prevent, or otherwise address fraud, security, safety or privacy issues. Please see Article 6(1)(f) of the E.U. General Data Protection Regulation ("GDPR") In addition, there may be other situations where other grounds for processing may exist, such as where processing is a result of legal requirements (GDPR Article 6(1)(c)) or for reasons of public interest (GDPR Article 6(1)(e)). Please see the "Your Rights" section of this Privacy Policy immediately below for more information about how you may request that we limit or refrain from processing your personal information.
  • Your Rights
    • Right of Access/Portability: You can ask to review details about the information we hold about you and how that information has been used and disclosed. Note that we may request to verify your identification before fulfilling your request. You can also request that your personal information is provided to you in a commonly used electronic format so that you can share it with other organizations.
    • Right to Correct Information: You may ask that we make corrections to any information we hold, if you believe such correction to be necessary.
    • Right to Restrict Our Processing or Erasure of Information: You also have the right in certain circumstances to ask us to restrict processing of your personal information or to erase your personal information. Where you have consented to our use of your personal information, you can withdraw your consent at any time.

You can make a request to exercise any of these rights by emailing us at privacy@jdsupra.com or by writing to us at:

Privacy Officer
JD Supra, LLC
10 Liberty Ship Way, Suite 300
Sausalito, California 94965

You can also manage your profile and subscriptions through our Privacy Center under the "My Account" dashboard.

We will make all practical efforts to respect your wishes. There may be times, however, where we are not able to fulfill your request, for example, if applicable law prohibits our compliance. Please note that JD Supra does not use "automatic decision making" or "profiling" as those terms are defined in the GDPR.

  • Timeframe for retaining your personal information: We will retain your personal information in a form that identifies you only for as long as it serves the purpose(s) for which it was initially collected as stated in this Privacy Policy, or subsequently authorized. We may continue processing your personal information for longer periods, but only for the time and to the extent such processing reasonably serves the purposes of archiving in the public interest, journalism, literature and art, scientific or historical research and statistical analysis, and subject to the protection of this Privacy Policy. For example, if you are an author, your personal information may continue to be published in connection with your article indefinitely. When we have no ongoing legitimate business need to process your personal information, we will either delete or anonymize it, or, if this is not possible (for example, because your personal information has been stored in backup archives), then we will securely store your personal information and isolate it from any further processing until deletion is possible.
  • Onward Transfer to Third Parties: As noted in the "How We Share Your Data" Section above, JD Supra may share your information with third parties. When JD Supra discloses your personal information to third parties, we have ensured that such third parties have either certified under the EU-U.S. or Swiss Privacy Shield Framework and will process all personal data received from EU member states/Switzerland in reliance on the applicable Privacy Shield Framework or that they have been subjected to strict contractual provisions in their contract with us to guarantee an adequate level of data protection for your data.

California Privacy Rights

Pursuant to Section 1798.83 of the California Civil Code, our customers who are California residents have the right to request certain information regarding our disclosure of personal information to third parties for their direct marketing purposes.

You can make a request for this information by emailing us at privacy@jdsupra.com or by writing to us at:

Privacy Officer
JD Supra, LLC
10 Liberty Ship Way, Suite 300
Sausalito, California 94965

Some browsers have incorporated a Do Not Track (DNT) feature. These features, when turned on, send a signal that you prefer that the website you are visiting not collect and use data regarding your online searching and browsing activities. As there is not yet a common understanding on how to interpret the DNT signal, we currently do not respond to DNT signals on our site.

Access/Correct/Update/Delete Personal Information

For non-EU/Swiss residents, if you would like to know what personal information we have about you, you can send an e-mail to privacy@jdsupra.com. We will be in contact with you (by mail or otherwise) to verify your identity and provide you the information you request. We will respond within 30 days to your request for access to your personal information. In some cases, we may not be able to remove your personal information, in which case we will let you know if we are unable to do so and why. If you would like to correct or update your personal information, you can manage your profile and subscriptions through our Privacy Center under the "My Account" dashboard. If you would like to delete your account or remove your information from our Website and Services, send an e-mail to privacy@jdsupra.com.

Changes in Our Privacy Policy

We reserve the right to change this Privacy Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our Privacy Policy will become effective upon posting of the revised policy on the Website. By continuing to use our Website and Services following such changes, you will be deemed to have agreed to such changes.

Contacting JD Supra

If you have any questions about this Privacy Policy, the practices of this site, your dealings with our Website or Services, or if you would like to change any of the information you have provided to us, please contact us at: privacy@jdsupra.com.

JD Supra Cookie Guide

As with many websites, JD Supra's website (located at www.jdsupra.com) (our "Website") and our services (such as our email article digests)(our "Services") use a standard technology called a "cookie" and other similar technologies (such as, pixels and web beacons), which are small data files that are transferred to your computer when you use our Website and Services. These technologies automatically identify your browser whenever you interact with our Website and Services.

How We Use Cookies and Other Tracking Technologies

We use cookies and other tracking technologies to:

  1. Improve the user experience on our Website and Services;
  2. Store the authorization token that users receive when they login to the private areas of our Website. This token is specific to a user's login session and requires a valid username and password to obtain. It is required to access the user's profile information, subscriptions, and analytics;
  3. Track anonymous site usage; and
  4. Permit connectivity with social media networks to permit content sharing.

There are different types of cookies and other technologies used our Website, notably:

  • "Session cookies" - These cookies only last as long as your online session, and disappear from your computer or device when you close your browser (like Internet Explorer, Google Chrome or Safari).
  • "Persistent cookies" - These cookies stay on your computer or device after your browser has been closed and last for a time specified in the cookie. We use persistent cookies when we need to know who you are for more than one browsing session. For example, we use them to remember your preferences for the next time you visit.
  • "Web Beacons/Pixels" - Some of our web pages and emails may also contain small electronic images known as web beacons, clear GIFs or single-pixel GIFs. These images are placed on a web page or email and typically work in conjunction with cookies to collect data. We use these images to identify our users and user behavior, such as counting the number of users who have visited a web page or acted upon one of our email digests.

JD Supra Cookies. We place our own cookies on your computer to track certain information about you while you are using our Website and Services. For example, we place a session cookie on your computer each time you visit our Website. We use these cookies to allow you to log-in to your subscriber account. In addition, through these cookies we are able to collect information about how you use the Website, including what browser you may be using, your IP address, and the URL address you came from upon visiting our Website and the URL you next visit (even if those URLs are not on our Website). We also utilize email web beacons to monitor whether our emails are being delivered and read. We also use these tools to help deliver reader analytics to our authors to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

Analytics/Performance Cookies. JD Supra also uses the following analytic tools to help us analyze the performance of our Website and Services as well as how visitors use our Website and Services:

  • HubSpot - For more information about HubSpot cookies, please visit legal.hubspot.com/privacy-policy.
  • New Relic - For more information on New Relic cookies, please visit www.newrelic.com/privacy.
  • Google Analytics - For more information on Google Analytics cookies, visit www.google.com/policies. To opt-out of being tracked by Google Analytics across all websites visit http://tools.google.com/dlpage/gaoptout. This will allow you to download and install a Google Analytics cookie-free web browser.

Facebook, Twitter and other Social Network Cookies. Our content pages allow you to share content appearing on our Website and Services to your social media accounts through the "Like," "Tweet," or similar buttons displayed on such pages. To accomplish this Service, we embed code that such third party social networks provide and that we do not control. These buttons know that you are logged in to your social network account and therefore such social networks could also know that you are viewing the JD Supra Website.

Controlling and Deleting Cookies

If you would like to change how a browser uses cookies, including blocking or deleting cookies from the JD Supra Website and Services you can do so by changing the settings in your web browser. To control cookies, most browsers allow you to either accept or reject all cookies, only accept certain types of cookies, or prompt you every time a site wishes to save a cookie. It's also easy to delete cookies that are already saved on your device by a browser.

The processes for controlling and deleting cookies vary depending on which browser you use. To find out how to do so with a particular browser, you can use your browser's "Help" function or alternatively, you can visit http://www.aboutcookies.org which explains, step-by-step, how to control and delete cookies in most browsers.

Updates to This Policy

We may update this cookie policy and our Privacy Policy from time-to-time, particularly as technology changes. You can always check this page for the latest version. We may also notify you of changes to our privacy policy by email.

Contacting JD Supra

If you have any questions about how we use cookies and other tracking technologies, please contact us at: privacy@jdsupra.com.

- hide

This website uses cookies to improve user experience, track anonymous site usage, store authorization tokens and permit sharing on social media networks. By continuing to browse this website you accept the use of cookies. Click here to read more about how we use cookies.