CFTC Extends Deadline for Swaps, SEF Regulation Implementation

This afternoon, the US Commodities Futures Trading Commission (CFTC) announced a series of changes to the dateline for implementation of clearable swaps and swap execution facilities (SEFs).

Crucially and as many expected, the proposed exemptive order stating those changes first has extended the sunset date for implementation of the regulation from July 16, 2011—the default date for implementation of Dodd–Frank Title VII, which has been included in a number of previously agreed rules—to December 31, 2012. The CFTC retains, however, that should its rules be finished sooner, the regulation will be effective at that time.

The order also made a number of additional clarifications: that agricultural swaps can already be cleared through a derivatives clearing organization or traded on a designated contract market (DCM); that as-of-yet unregistered trading facilities required to register as a SEF under the new regulation may use the additional time to complete that transition; and, that regulators' work further defining certain key terms, including "swap dealer" and “securities-based swap dealer," is nearing completion.

"The staffs [of the CFTC and Securities and Exchange Commission] are making great progress, and I anticipate the Commissions will take up this final definitions rule in the near term. Until that rule is finalized, the proposed exemptive order appropriately provides relief from the effective dates of certain Dodd–Frank provisions," says CFTC chairman Gary Gensler in a statement.

Comments on the order will be accepted for 14 days after its publication in the federal register.