CFTC Proposed Rule: Swap Transaction Compliance and Implementation Schedule - Clearing and Trade Execution Requirements
|Proposal Date||Final Rule Issue - Clearing||Final Rule Issue - Execution||Effective Date - Execution|
|September 20, 2011||July 30, 2012||June 4, 2013||September 28, 2012|
On September 8, 2011, the Commodity Futures Trading Commission (CFTC) held an open meeting to consider the issuance of proposed rulemakings under the Dodd-Frank Act. One of the agenda items was a proposed rule regarding the implementation timeline for trading and execution requirements for swap participants.<ref>Open Meeting on Two Proposed Rules under the Dodd-Frank Act. CFTC. Retrieved on September 8, 2011.</ref>
One of the provisions of Title VII of the Dodd-Frank Act amends the Commodity Exchange Act to require all clearable swaps to trade on either a designated contract market or a swap execution facility, a new type of entity created by the act.
The CFTC has been mandated by Dodd-Frank to create, implement and enforce rules regarding the trading and clearing of swaps. These rules include comprehensive regulation of swap dealers and major swap participants.
Summary of the Rule Proposal
The commission plans require compliance in three phases, depending on a swap entity's level of activity and sophistication:
- Phase 1 - 90 days after a final ruling involves "Category 1" entities, which include swap dealers and major swap participants, security-based swap dealers and major swap participants, and active funds.
- Phase 2 - 180 days after a final ruling involves "Category 2" entities, which will include commodity pool operators, private funds, employee benefit plans, persons predominantly involved in the business of banking or financial activity, provided that the entity is not a third-party subaccount.
- Phase 3 - 270 days after a final ruling will include any "Category 2" entities which are third-party subaccounts, plus all other swaps.
- End-user exception to mandatory clearing
- definitions of swap related terms
- protection of cleared swaps customer contracts and collateral
- Final rules on designated contract markets and swap execution facilities
Related Documents: Fact Sheet, Q&A, Federal Register Entry