Publications

Pursuant to provisions of the Dodd-Frank Act (“Dodd-Frank”), the Commodity Futures Trading Commission (the “CFTC”) has jurisdiction to regulate the over-the-counter swap market represented in part by interest rate exchange agreements tied to debt obligations, including those of governmental and non-profit entities. Regulations have recently been issued regarding business conduct standards for swap dealers, which include “safe harbor” protections provided in the regulations that may be availed of by swap dealers. These safe harbor provisions are the motivating force behind the creation by the International Swap Dealers Association (ISDA) of its DF Protocol system whereby the parties to a regulated swap independently provide certain information to a digital platform as a means of amending existing swap documentation. These safe harbors also address certain matters that swap dealers must assure are part of the swap policies of their counterparties (such as the requirement for a governmental “Special Entity” to engage an independent swap advisor and monitor its performance). Although the need for safe harbors does not exist until there is activity involving the swap dealer with respect to existing or new swaps (including amendment or novation of existing swaps), there is pressure at the present time from the swap dealer community to take the actions required for effectiveness of the safe harbors, including participation in the DF Protocol, regardless of whether or not there is swap activity ongoing or planned at present. The CFTC has not imposed any compliance deadlines for these actions.