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Dodd-Frank 30 Day Countdown: Dodd-Frank is here

Insight Robin Powers Robin Powers · July 16, 2011

July 16 has Arrived…

And the world hasn’t ended.

More importantly, the financial sector hasn’t gone into a state of meltdown.  While we will continue to watch as rules are debated, agency heads speak before Congress, and press releases are circulated, it is important to note that the implications of Dodd-Frank’s July 16 deadline had a stronger bark than bite.

Despite all of the headlines that the SEC and CFTC have generated as a result of their delays, it is comforting to know that these agencies are not hastily creating rules solely to adhere to the July 16 deadline.  While they still have a large workload ahead of them drafting rules dictated by the Act, they appear to be working at a swifter pace then what is typically seen by most government agencies. 

International transformations regarding the regulatory structure of the swaps market will continue to progress. The G20 has pledged that OTC derivatives will be traded on exchanges by the end of 2012. Across the world, some countries are enacting similar regulatory legislation for their financial markets, some are waiting to see the repercussions of Dodd-Frank prior to engaging in their own lawmaking, and others have been using clearinghouses for their OTC derivatives for some time now.

We will continue to update you as more Dodd-Frank news is released. Thank you for following our 30 Day Dodd-Frank Countdown!

30 Days of Takeaways from Dodd-Frank

  1. Dodd-Frank provisions go into effect today despite having the SEC and CFTC vote themselves a 6-month extension for their rulemaking deadline.
  2. As of today, aspects of the Commodities Futures Modernization Act will no longer be in effect.
  3. The FIA and ISDA gathered a group of buy and sell side firms to create a standard template for the swaps market known as the FIA-ISDA Cleared Derivatives Execution Agreement.
  4. The SEC announced that they will provide temporary relief to provisions originally set to go into effect today.
  5. As a result of confusion regarding date guidelines, investment advisors were left with the possibility of breaking newly required hedge fund registration rules before they were even entered into the SEC’s system.
  6. Dodd-Frank requires agencies such as the SEC, CFTC to consult with foreign regulators regarding the G20 plans to have consistent OTC derivatives global regulation.
  7. The E.U. appears to be waiting to see the implications Dodd-Frank has on financial markets before implementing regulations of its own, leaving some U.S. market experts with concerns that financial transactions will migrate to Europe.
  8. SEC grants relief on new Exchange Act requirements and leaves open a forum for public comments.
  9. Canada’s Ontario Securities Commission issues a proposal which would require OTC derivatives transactions to be reported through trade repositories that meet international standards.
  10.  The Federal Reserve Board has gathered its most qualified members and has enacted a system to comment on the proposed rules by Dodd-Frank rulemaking agencies.
  11. Australia’s Council of Financial Regulators suggest that Australian lawmakers should take a more judicious approach to financial reform than American lawmakers did with Dodd-Frank
  12. Japan amended their regulations under the Financial Instruments and Exchange Act (FIEA) and tightened the rules relating to the marketing of derivatives transactions and structured products by the financial services sector.
  13. India’s Finance Minister and U.S. Treasury Secretary Geithner met for Economic Partnership talks in an effort to work towards uniform regulation.
  14. Experts warn smaller funds should secure a clearing member notwithstanding their efforts to conserve legal resources. 
  15. In Brazil, OTC Derivatives have been regulated since 1994, and across the border in Argentina, there are capital incentives for trading derivatives on an exchange.
  16. After today, any pooled investment vehicle that invests in commodities derivatives, interest rate derivates, and most currency derivatives (just to name a few), will be considered a “commodity pool.”
  17. SEC finalizes whistleblower rules, where original information reported to the SEC resulting in monetary sanctions over $1 million rewards the whistleblower with 10-30% of the money recovered.
  18. SEC re-defines family offices and determines they are no longer immune under the Investment Advisers Act of 1940.
  19. Many in the financial sector celebrated the U.S.’s Independence Day by sharing their opinions about the legislation.
  20. The SEC and CFTC face budget cuts despite increased rule making burdens on their agencies.
  21. Regulators estimate that 500 hedge and private equity funds will be added to the SEC’s registry, and  these funds will have to report more information to the regulators than in the past.
  22. FDIC OK’s claw back provision, in which executives may be required to give back up to two years of salary if deemed responsible for a financial firm’s failure.
  23. CFTC and SEC take different approaches to categorizing relief under certain Title VII provisions.
  24. EU announces that it will push back all decisions on derivatives regulation until September 2011.
  25. NYSE sees derivatives growth in the month prior to Dodd-Frank’s enactment.
  26. The largest U.S. banks via a joint letter on June 29, 2011 asked the Commodities Futures Trade Commission (CFTC) to remove the requirement that overseas swap transactions be subject to margin requirements, regardless of whether the swap counterparty is an affiliate of a U.S. organization.
  27. The CFTC completes the first set of major rules in accordance with Dodd-Frank, focusing on increased policing power to catch fraud and insider trading.
  28. ISDA states that Global regulators need to first coordinate rules for trade repositories before drafting other derivatives rules.
  29. Citigroup predicts that interest rate and credit default swaps will increase more than 10% by 2013 even as buy side firms face a higher cost of trading. 
  30. How does Dodd-Frank compare to Japan's Financial Instruments and Exchange Act.

-Stephanie Kane co-authored this post