CFTC and SEC Issue Final Swap-Related Rules Under Title VII of Dodd-Frank: CFTC and SEC Issue Final Rules and Guidance to Further Define the Terms “Swap Dealer,” “Security-Based Swap Dealer,” “Major Swap Participant,” “Major Security-Based Swap Participant” and “Eligible Contract Participant”

Sullivan & Cromwell LLP - June 8, 2012

On April 24, 2012, the Commodity Futures Trading Commission and the Securities and Exchange Commission approved final rules to define the terms “swap dealer,” “security-based swap dealer,” “major swap participant,” “major security-based swap participant” and “eligible contract participant” under Title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act. The final rules seek to address concerns raised by a variety of commenters that the proposed definitions would have captured a large number of commercial market participants within the definition of swap dealer. The CFTC estimates approximately 125 entities will be covered by the definitions of swap dealer and major swap participant and of those entities, six or fewer will be covered by the definition of major swap participant. The SEC estimates that 50 or fewer entities may ultimately need to register as security-based swap dealers and that five entities, or perhaps no entity, will be required to register as a major security-based swap participant.

The final rules will become effective on July 23, 2012. However, most of the requirements imposed on dealers and major participants will not be effective until the CFTC and the SEC approve additional final rules defining the terms “swap”, “security-based swap” and “mixed swap.”