Once again this week, the Dodd-Frank Act is in the spotlight, although this time it is the lack of regulations that is causing some anxiety amongst OTC derivative dealers. No doubt you have heard much about the Wall Street reforms made by the Dodd-Frank Act, which repealed the Commodity Futures Modernization Act of 2000. As a result, the Commodities Futures Trading Commission ("CFTC") has been charged with implementing new rules to regulate OTC derivatives trading by July 16, 2011. The CFTC has issued numerous proposals, but these are not yet finalized as outstanding questions from lawmakers are still to be addressed. According to a Reuters report last week, the CFTC is not going to meet the July deadline. Given the task before the CFTC, it is not surprising that this deadline may be missed, and indeed it is not the first such report. In December 2010, it was reported by Bloomberg that the CFTC Chairman Gary Gensler had informed lawmakers at a House Agriculture Subcommittee meeting that the CFTC would miss its January deadline to limit speculation in commodities, including energy and metals. Nevertheless, what is raising temperatures among the OTC dealers is the likely regulatory void that will be created on July 16, 2011 unless transition measures are put in place whilst the CFTC prepares the new regulations. We will continue to keep a close eye on developments in this regard and will issue a detailed briefing once the CFTC publishes the new regulations.

In other news, the Financial Stability Board ("FSB") announced its second peer review of the financial industry compensation practices to assess the progress being made in implementing the FSB principles. The FSB principles, which were adopted following the G20 leaders' proposals to regulate remuneration in the financial services sector back in 2009, are largely supervisory in nature. By comparison, the regulations adopted by the European Union's Capital Requirements Directive ("CRD III") are more prescriptive (for example requiring the restriction of cash bonuses to a maximum percentage of variable pay) and covers a wider group of institutions including investment firms, managers of hedge funds, private equity funds and other alternative investment vehicles. The disparity in the regulatory approach may present a challenge to multinational institutions, whose employees may therefore be subject to differing rules regarding bonuses and compensation. Our cross-border financial services team in the U.S., Europe and Asia are well placed to assist your institution in negotiating the various compensation regulations across a variety of jurisdictions.