The CFTC recently finalized three rules under the Dodd–Frank Act concerning the trading of swaps on organized facilities:
- SEF Core Principles and Requirements out-line the core principles and other require-ments for swap execution facilities (“SEFs”). The rules become effective on August 5, 2013, except for the rule which becomes effective August 5, 2015 and establishes a 180-day re-view period for SEF applications submitted after that date. Parties have until October 2, 2013 to comply with the new rules, except that (a) from August 5, 2013 to October 2, 2014, market participants may comply with the minimum market participant requirement by transmitting a request for quote to no fewer than two market participants, and (b) each affected party must comply with the “warning letter” requirement by August 5, 2014. The final rules are available here.
- The MAT Rule (make available to trade) out-lines the process for a designated contract market (“DCM”) or SEF to make a swap available to trade under Section 2(h)(8) of the CEA, and provides the compliance and implementation schedule for swap transactions. This rule becomes effective August 5, 2013. Temporarily registered SEFs can begin sub-mitting MAT determinations for swaps that they list and that are subject to the mandatory clearing requirement prior to this date. Market participants will not be required to trade any swap on a SEF or DCM until the later of 30 days after the MAT determination for that trade is approved or deemed certified by the CFTC, and the date on which the counterparties to the swap are required to clear the swap. The final rule is available here.
- The Swaps Block Rule outlines procedures to establish appropriate minimum block sizes for large notional off-facility swaps and block trades. This rule becomes effective July 30, 2013, and has a two-period phase in. The final rule is available here.