The Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”) was signed into law on July 21, 2010. This comprehensive law, which was enacted in response to the financial crisis of 2008, made sweeping changes to the financial markets. One area particularly affected by Dodd-Frank was (and is) the introduction of regulation of the U.S. over-the-counter (“OTC”) derivatives market, which was, essentially, unregulated prior to Dodd-Frank. Under this new law, the Commodity Futures Trading Commission (“CFTC”), which already had jurisdiction over regulated futures markets, was given oversight of the OTC markets.
In addition to giving the CFTC oversight of the OTC markets, Dodd-Frank created new categories of market participants, including: Swap Dealers, Major Swap Participants, Swap Execution Facilities, Swap Data Repository and End Users.
All of these market participants have registration and significant ongoing compliance requirements. Among other things, certain of the registrants must file annual reports that are signed off on by a Chief Compliance Officer, as well as engage in an annual audited risk assessment.
There has been substantial debate about the international implications of Dodd-Frank. A previous CFTC Chairman, Gary Gensler, took the position that Dodd-Frank should apply to any transaction that in any way touched the U.S. The current CFTC Chairman Giancarlo has taken a more flexible approach. However, there is a substantial “gray area” at the moment, as it is not entirely clear what transactions involving international parties will require Dodd-Frank registration and oversight. As such, we recommend contacting a compliance professional to help work through your Dodd-Frank coverage issue.
Lastly, various new rules are issued by the CFTC on an unpredictable basis that refer back to Dodd-Frank. Sometimes these rules run hundreds of pages. They need to be analyzed to determine whether any registrant is touched by the new regulation.
Bovill has consultants with substantial experience working with entities to solve their Dodd-Frank issues, as well as to assist the registrants to properly comply with the mandates of Dodd-Frank. Please feel free to contact us with any questions.