CFTC expresses view that most state and local governmental swaps are exempt from Dodd-Frank Clearing Requirement
This Advisory discusses the recent rulemaking commentary by the Commodity Futures Exchange Commission to the effect that most state and local governmental swaps are exempt from the clearing requirements of the Dodd-Frank statutes.
The Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”) amended the Commodity Exchange Act (the “CEA”), under the regulatory jurisdiction of the Commodity Futures Trading Commission (the “CFTC”), to require that certain interest rate exchange agreements; (“Swaps”), including Swaps of the type routinely executed by state and local government entities, must be cleared through derivatives clearing organizations unless otherwise exempted from clearing by the terms of the CEA. Those Swaps that are subject to a clearing requirement must also be executed on a designated contract market or swap execution facility (unless no such organization has made the particular Swap available to trade). Among other things, the requirement for clearing of Swaps was intended to bring to the Swap transactions the financial support of the clearing organization to secure the parties’ payment obligations (including security for and payment of termination fees). Requiring that swaps executed by state and local governmental entities be cleared and be executed on exchanges would impose numerous onerous requirements, including margin and collateralization requirements. As a result, state and local governmental entities and their trade associations have been seeking exemption from these requirements.
Also of Interest
- Rule 15c2-12 Compliance Alert
This edition of the Hawkins Advisory is a compliance alert, supplementing the Hawkins Advisory regarding Rule 15c2-12 that is dated August 22, 2018.
- Hawkins Attorneys Featured at Bond Attorneys’ Workshop
Four Hawkins attorneys will serve on panels at the National Association of Bond Lawyers 43rd annual Bond Attorneys’ Workshop which will be held September 26-28, 2018 in Chicago.
- Rule 15c2-12 Amendments
This Hawkins Advisory analyzes the amendments to Rule 15c2-12 that were adopted by the SEC on August 20, 2018.
- Hawkins Attorneys Recognized In The Best Lawyers in America 2019 List
Hawkins is pleased to announce that six attorneys were named by their peers to the Best Lawyers in America 2019 list.