Application of Dodd-Frank Swaps Regulations to Foreign Banks AIBA Quarterly Meeting September 20,...
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Transcript of Application of Dodd-Frank Swaps Regulations to Foreign Banks AIBA Quarterly Meeting September 20,...
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Application of Dodd-Frank Swaps Regulations to Foreign Banks
AIBA Quarterly Meeting September 20, 2012
David F. Freeman, Jr.Arnold & Porter LLPWashington, [email protected]
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General Requirements of Title VII of Dodd-Frank Act
Registration of Swap Dealers and Major Swap Participants
Centralized Execution, Clearing, Margin and Collateralization of Most Swaps
Reporting of Swap Transactions Anti-Fraud Requirements Division of CFTC/SEC Jurisdiction
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Swap Dealer Regulatory Requirements
Registration of Firm and Key Individuals Reporting of Transactions DCM/SEF Execution Clearing Margin Rules Internal Compliance & Controls Books & Records Disclosures
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Major Swap Participants Regulatory Requirements
Registration Reporting Compliance Program/Internal Controls Anti-fraud/Anti-manipulation
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Cross-Border Issues
DFA 722, 772: Coverage if Some Part of Transactions Occurs in U.S.• A party or counterparty• A guarantor• Arranging or clearing
CFTC Proposal on Cross-Border Issues, Extraterritorial Application and Substitute Compliance 77 Fed. Reg. 41214 (July 12, 2012)
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FX Issues and Potential Exemption
Spot transactions Retail transactions Identified banking products Treasury exemption proposal for FX Swaps and
Forwards, but not options – 76 Fed. Reg. 25774 (May 5, 2011)
Issue on non-deliverable forwards
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Timing
Swap dealer registration triggered by volume of new swaps after October 12, 2012, must register within 2 months after reaching threshold
Major swap participant-registration Conforming Existing Swaps Reporting transactions Recordkeeping Compliance Program Disclosures and anti-fraud
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Interaction with Volcker Rule
Volcker Rule § 619 of Dodd-Frank Act Restricts Proprietary Trading, with Some Exceptions
• Regulated Dealer Exemption• Buy-and-hold• Hedging• US Govis, Munis, CRA investment• Client transactions as agent• Insurance• Cash Management
Foreign Banks Non-U.S. Offices in Transactions Not Involving U.S.
Compliance Rule Proposal – Global Applicability
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DFA § 716 Restricts Access to Fed Discount Window
Restricts Federal Insurance, Fed discount window access, other Federal funding/support for Swap Dealers, Major Swap Participants
Push out exemption for FDIC-insured bank affiliates may not be available to foreign bank branches without FDIC insurance
Broad-based emergency lending program exemption
Proposed legislative fix