On May 16, 2013, the Commodity Futures Trading Commission (the “CFTC”) adopted final rules implementing certain provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) relating to (1) the registration and operation of swap execution facilities (“SEFs”), (2) the Dodd-Frank Act’s mandatory trade execution requirement and (3) the process for determining the threshold at which large swap transactions can qualify as “block trades” under the Dodd-Frank Act and the CFTC’s rules. Among the adopted rules are:

  • the so-called “SEF Rule” included under Part 37 of the CFTC regulations, which defines which types of trading platforms must register as SEFs, the core principles by which SEFs must operate and the execution methods that can be used to satisfy the trade execution requirement in Section 2(h)(8) of the Commodity Exchange Act (the “CEA”);
  • the so-called “Made Available to Trade Rule” included under Parts 37 and 38 of the CFTC regulations, which defines the procedures and criteria for determining that a swap that is required to be cleared is subject to the trade execution requirement; and
  • the so-called “Block Trade Rule” included under Part 43 of the CFTC regulations, which defines which large trades will be disseminated to the public on a delayed basis under the CFTC’s realtime reporting rules and will be exempt from certain trading rules.

Each of these rules is discussed in detail in the June 5, 2013 Davis Polk Client Memorandum, CFTC Finalizes SEF Rules and Adopts Minimum Block Trade Sizes.

The SEF Rule and the Made Available to Trade Rule will become effective on August 5, 2013. The Block Trade Rule will become effective on July 30, 2013.