Swap Dealers and Major Swap Participants Regulation - Registration - Comment Letters

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Dodd-Frank Timeline, Registration of Swap Dealers and Major Swap Participants
Final Rule Issue Effective Date Compliance Date - Swap Dealers Compliance Date - Major Swap Participants
January 19, 2012 March 19, 2012 January 1, 2013 October 12, 2012

Comment Letters addressing the registration of swap dealers and major swap participants.

Working Group of Commercial Energy Firms - January 24, 2011[edit]

Registration of Swap Dealers and Major Swap Participants
January 24, 2011

From the comment letter:

"Given the lack of certainty in the definition of “swap dealer” and the potential serious consequences of failing to register as a swap dealer, the Working Group respectfully requests that the Commission provide a safeguard to market participants by (1) providing enough additional guidance or precedent regarding the definition of “swap dealer” to allow market participants to make a definitive conclusion as to whether they are a swap dealer; (2) providing a safe harbor for market participants who make a good faith determination that they are not a swap dealer, but who are later determined to be a swap dealer by the Commission; or (3) in lieu of market participants making uncertain determinations, notifying market participants that the Commission believes that they might be a swap dealer and should commence the registration process." In addition, "the Commission should confirm that simply entering into a swap on a U.S. designated contract market or a U.S. swap execution facility, clearing a swap at a U.S. derivatives clearing organization or reporting a swap to a U.S. swap data repository does not require a foreign entity to register as a swap dealer or major swap participant."

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National Futures Association - January 24, 2011[edit]

Registration of Swap Dealers and Major Swap Participants
January 24, 2011

From the comment letter:

"In general, NFA believes that, to the extent consistent with statutory requirements, the registration of Swap Entities should be incorporated into the current registration framework in a manner that parallels the requirements imposed on the current registration categories. In NFA's view, the Commission's proposed rules largely accomplish this but contain certain provisions that require clarification and amplification. This letter addresses these provisions and responds to the Commission's requests for comment concerning NFA's role in the registration process and the manner in which Swap Entities might fulfill their due diligence requirements concerning their Associated Persons." Specifically, "NFA recommends that the Commission delegate to NFA not only the authority to process Swap Entity registration applications and conduct background checks but also to conduct adverse registration proceedings."

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International Swaps and Derivatives Association - January 24, 2011[edit]

Registration of Swap Dealers and Major Swap Participants
January 24, 2011

ISDA suggests that several broad principles may be helpful going forward:

  • Registration should be limited to persons that meet the definition of SD or MSP solely on the basis of their business with US customers, and it should be solely US customer business that is subject to any attendant regulation.
  • To the extent registration is to be required, the CFTC should adapt registration requirements for foreign registrants whose home countries have enacted and implemented comparable registration regulations that do not conflict with US regulations. As foreign regulators work to adopt their regulatory regimes, we urge the CFTC to coordinate with them on phase-in of respective implementation and compliance requirements.
  • When a foreign registrant’s home country has comparable registration regulations that directly conflict with CFTC regulations, the CFTC should consider principles of international comity in determining whether and to what extent those registrants should be further regulated by the CFTC (we would expect that when the relevant “actor” is outside of the United States, the CFTC would generally defer to foreign regulation).
  • Inter-affiliate and inter-bank branch trades should not count for purposes of characterizing an entity as an SD or MSP, and should not be the basis for attendant
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Hess Corporation - January 24, 2011[edit]

Registration of Swap Dealers and Major Swap Participants
January 24, 2011

Offering the perspective of an international participant in the global commodities and derivatives markets, Hess offers the following suggestions:

  • The Commission should apply the swap dealer registration requirement in a manner that is consistent with the balanced regulatory approach contemplated in Section 2(i). The Commission should establish a swap dealer registration requirement that imposes regulatory obligations on swap counterparties only when such entities engage in swap dealing activities that have a direct and significant connection with, or effect on, U.S. commerce.
  • The Commission should apply the swap dealer registration requirement in a manner that does not exceed the limited extraterritorial jurisdiction of the U.S. courts. A swap dealer registration requirement that attempts to go further and arguably exceeds the judiciary's authority to enforce compliance will create considerable uncertainty for swap counterparties and their U.S. affiliates.
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Federal Home Loan Banks - January 24, 2011[edit]

Registration of for Swap Dealers and Major Swap Participants
January 24, 2011

Concerned that some of their incidental activities will cause them to be regulated as limited swap dealers, the FHLBanks offer their suggestions to the Commission. In particular, the FHLBanks explain:

  • In order to give meaning to the limited swap dealer concept, the FHLBanks believe that limited swap dealers should be added as a separate category of CFTC registrants.
  • Just as current CFTC registrants determine themselves whether they are required to register in a certain capacity, limited swap dealers should determine themselves whether they need to register as a limited swap dealer.
  • In regards to limited swap dealers, only those persons who control the limited swap dealer's swap dealing activities should have to register with the CFTC.
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Shell Energy - January 24, 2011[edit]

Registration of Swap Dealers and Major Swap Participants
January 24, 2011

Shell Energy argues that the Commission should apply the swap dealer registration requirement in a manner consistent with Section 2(i) of the CEA. Shell urges the Commission "to establish a swap dealer registration requirement that imposes regulatory obligations on non-U.S. entities only when such entities engage in swap dealing activities that have a direct and significant connect with, or effect on, U.S. commerce... In addition to the Commission's ability to enforce its authority under the Dodd-Frank Act to activities outside the United States, there is the issue of whether the agency's attempt to regulate non-U.S. entities for conduct occurring outside the United States will potentially undermine foreign laws and international cooperation in major regulatory issues, including financial reform."

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References[edit]

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