CFTC Exemptive Relief Upon Effective Date of Title VII of Dodd-Frank: CFTC Issues Proposed Order to Provide Relief from Certain Provisions of Title VII That Would Be Effective on July 16, 2011

Sullivan & Cromwell LLP - June 20, 2011

On June 14, the Commodity Futures Trading Commission (the “CFTC”) held an open meeting to propose an order providing temporary relief from certain swaps-related provisions of Title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”) that will automatically take effect on July 16, 2011 (the “Proposed Order”). The purpose of the Proposed Order is to provide legal certainty to swap transactions after the effective date of Dodd-Frank, but prior to the effective date of the required CFTC rulemaking to implement the new Dodd-Frank regulatory regime. In general, the proposed temporary exemptive relief would expire upon the earlier of the effective date of the applicable required final rulemaking, or December 31, 2011. Comments to the Proposed Order are due by July 1, 2011.

On a related note, on June 15, the Securities and Exchange Commission (the “SEC”) issued an order providing temporary relief from most of the requirements of Title VII relating to security-based swaps transactions that would otherwise have applied on June 16, 2011. Although the SEC order has immediate effect, the SEC is soliciting comments until July 6, 2011.