CFTC Amends Effective Date for Swaps Regulation

The US Commodity Futures Trading Commission (CFTC) has issued its final order extending the effective date of swaps regulation.

Originally scheduled for 14 July 2011, the order extends this deadline to 31 December 2012, or further if deemed necessary. It also removes several key references within the document such as 'swap', pursuant to the regulator's ongoing efforts to codify definitions of these ahead of regulation. In addition, the registration of facilities operating as swap execution facilities (SEFs) has also been delayed, given the CFTC's continuing finalization of rules regarding the operation of these entities.

"The CFTC and the Securities and Exchange Commission (SEC) have now completed the rule further defining the term 'swap dealer' and 'securities-based swap dealer'," says Gary Gensler, chairman at the CFTC. "Thus, the exemptive order no longer provides relief as it once did until those terms were further defined. The Commissions are also mandated by the Dodd-Frank Act to further define the term 'swap' and 'securities-based swap'. The staffs 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 exemptive order appropriately provides relief from the effective dates of certain Dodd-Frank provisions."

The final order can be found here. SEFs, under the Dodd-Frank Act, will provide central clearing for standardized derivatives such as swaps.