On March 10, the Commodity Futures Trading Commission released an initial response to the order of the US District Court for the District of Columbia in SIFMA v. CFTC remanding eight swaps-related rulemakings to the CFTC. As reported in the Corporate and Financial Weekly Digest edition of September 16, 2014, various trade associations challenged the extraterritorial application of certain swaps-related rules promulgated under Title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act, as well as the CFTC’s Interpretative Guidance and Policy Statement Regarding Compliance with Certain Swap Regulations. The District Court dismissed the broad challenge to the CFTC’s cross-border guidance, but separately found that the CFTC failed to state whether the costs and benefits identified in the preambles to eight rulemakings applied to overseas swaps activities. The District Court remanded without vacating these rulemakings to the CFTC so that the CFTC could address certain inadequacies in its consideration of the costs and benefits of these rules on swaps activities outside the United States.
In its initial response to the District Court’s ruling, the CFTC stated that it considers the costs and benefits of the remanded rules based on its understanding that the swaps market functions internationally. Accordingly, the CFTC’s initial response supplemented the preambles to the eight remanded rules by clarifying that the costs and benefits identified in these rules apply both to domestic swaps activities and swaps activities outside the United States that are subject to the CFTC’s jurisdiction.
Separately, the CFTC is requesting public comments on whether the costs and benefits arising from extraterritorial application of any of the remanded rules differ from those arising from application of the rules domestically. Following its review of the comments, the CFTC will supplement its initial response to the District Court’s ruling, as well as propose potential changes to the substantive requirements of the rules.