The US Commodity Futures Trading Commission (the CFTC) and
the US Securities Exchange Commission (the SEC and,
collectively with the CFTC, the Commissions), in connection
with their respective rulemaking obligations under the
Dodd-Frank Wall Street Reform and Consumer Protection Act
(DFA), have recently published proposed rules relating to Swap
While the Commissions have thus far broadly aligned their
rulemaking under the DFA, the two sets of proposed rules
reflect fundamentally different approaches.
It is important to consider the principal differences,
bearing in mind that this may mean that largely correlated
derivatives products such as index credit derivatives and their
component single-name transactions may have to be executed on
very different execution venues.
The DFA, signed into law by President Obama on July 21 2010,
makes sweeping reform of the derivatives markets in the United
States. The DFA distinguishes, inter alia, between swaps, which
are to be regulated by...