Implementation of DFA: Biggest Challenges and Biggest Risks

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1 Implementation of DFA: Biggest Challenges and Biggest Risks Co-Chairs: Kenneth M. Raisler, Sullivan & Cromwell Mark Young, Skadden Panelists: Douglas Harris, Promontory Financial Group Annette Nazareth, Davis Polk & Wardwell Robert Pickel, ISDA Edward Rosen, Cleary Gottlieb, Steen & Hamilton LLP Jerrold Salzman, Skadden Hon. Mark P. Wetjen (Invited), CFTC Barbara Wierzynski, FIA Table of Contents 1. The "Makes the Swap Available to Trade" Mystery: When Does it Happen, Who Decides and Why Does it Matter?, Mark D. Young and Rachel Kaplan Reicher, Skadden, Arps, Slate, Meagher & Flom LLP 2. Panelist Biographies 2012 Derivatives & Futures Law Committee Meeting - 1 -

2 ABA BUSINESS LAW SECTION DERIVATIVES & FUTURES LAW COMMITTEE WINTER MEETING JANUARY 26-28, 2011 NAPLES, FL PANEL ON IMPLEMENTATION OF DFA The "Makes the Swap Available to Trade" Mystery: When Does it Happen, Who Decides and Why Does it Matter? By Mark D. Young and Rachel Kaplan Reicher, Skadden, Arps, Slate, Meagher & Flom LLP The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank) 1 provides a statutory framework for comprehensive regulation of swaps by the Commodity Futures Trading Commission (CFTC) under the Commodity Exchange Act (CEA) and securitybased swaps (SB swaps) by the Securities and Exchange Commission (SEC) as securities under the Securities Act of 1933 (Securities Act) and the Securities Exchange Act of 1934 (Exchange Act). A key element of this framework is the mandate that some swaps must be cleared and some (maybe virtually all) of those swaps must be traded and executed on a regulated trading platform. See Dodd-Frank 723 (called "Clearing," adding CEA 2(h)) and 763(a) (called "Clearing for Security-Based Swaps," adding Exchange Act 3C). 2 For the clearing mandate, Congress prescribed specific processes and procedures governing the CFTC's determination that certain swaps must be cleared. Once that CFTC determination is made, Congress mandated that both parties to a "must be cleared" swap must execute the swap on a regulated platform unless either of two conditions are met: A) one party to the swap qualifies for the so-called "commercial end user" exemption (CEA 2(h)(7)) 3 or B) no exchange or swap execution facility (SEF) "makes the swap available to trade." CEA 2(h)(8). 4 How do you know when a SEF "makes a swap available to trade" or "MAT"? In Dodd- Frank, Congress did not provide any process or procedure for making that decision. In that sense, the statute leaves the resolution of the issue to the swap counterparties themselves; they must comply with the trade execution mandate, if applicable, by trading their swap on a regulated platform if it is available. While that logic seems straightforward, both the CFTC (and SEC) have offered much different MAT formulations, including a recent extensive CFTC proposal. These proposals highlight some of the basic problems in implementing Dodd-Frank. Even when Public Law , 124 Stat (July 21, 2010). For simplicity, we will refer to swaps and the CFTC but provide parallel cited authority as applicable for SB swaps and the SEC. For SB swaps, see Exchange Act 3C(g). For SB swaps, see Exchange Act 3C(h). 1

3 Congress writes statutory text that seems plain on its face, the implementing agencies sometimes can not resist the temptation (often in response to comments from stakeholders) to embroider procedures and determinations around the statutory text. The trade execution mandate for swaps is one of the pillars of the Dodd-Frank regulatory structure and the MAT issue lies at its core. Resolution of the MAT issue is therefore both a helpful illustration of the challenges the CFTC faces generally in implementing Dodd-Frank and an essential step in finalizing the planned regulatory structure for swaps. The Process For Determining Which Swaps Must Be Cleared The clearing and trade execution mandates are often seen as statutory siblings. Yet, only the clearing mandate has a statutory procedure for the CFTC's determination of what swaps must be cleared based on the following five factors: 1. The existence of significant outstanding notional exposures, trading liquidity and adequate pricing data; 2. The availability of rule framework, capacity, operational expertise and resources, and credit support infrastructure to clear the contract on terms that are consistent with the material terms and trading conventions on which the contract is then traded; 3. The effect on the mitigation of systemic risk, taking into account the size of the market for such contract and the resources of the derivatives clearing organization available to clear the contract; 4. The effect on competition, including appropriate fees and charges applied to clearing; and 5. The existence of reasonable legal certainty in the event of the insolvency of the relevant derivatives clearing organization or one or more of its clearing members with regard to the treatment of customer and swap counterparty positions, funds and property. See Dodd-Frank 723(a), adding CEA 2(h)(2)(D). 5 Congress required the CFTC to apply these five factors to those swaps that a derivatives clearing organization had made eligible for clearing. Following public comment and the Commission's analysis of relevant data, the CFTC will determine what swaps will become subject to the clearing mandate. See id.; Process for Review of Swaps for Mandatory Clearing, 76 Fed. Reg (July 26, 2011) For SB swaps, see Dodd-Frank 763(a), adding Exchange Act 3C(b)(4). For SB swaps, see Dodd-Frank 763(a), adding Exchange Act 3C(b)(4); See also the SEC's Proposed Rules regarding the Process for Submissions for review of Security-Based Swaps for Mandatory Clearing and Notice Filing Requirements for Clearing Agencies; Technical Amendments to Rule 19b-4 Applicable to All Self- Regulatory Organizations, 75 Fed. Reg (Dec. 30, 2010). 2

4 The Process For Determining Which Swaps Are "Made Available to Trade" Dodd-Frank contemplates no process for, or even the issuance of, a MAT determination by the CFTC or anyone else. Unless a party to the swap qualifies for the commercial end user exemption, the statute simply provides that a swap that is required to be cleared must be traded and executed on a SEF or DCM unless "no board of trade or swap execution facility makes the swap available to trade." 7 The absence of a statutory basis for authorizing MAT submissions by SEFs or determinations by the CFTC could be explained by the fact that a swap can only be required to be cleared if the CFTC has already determined that the swap, among other things, has significant outstanding notional exposures, trading liquidity and adequate pricing data. CEA 2h(2)(D) and CFTC Rule 39.5(b)(3)(ii)(A). 8 Congress could have reasoned that if only liquid, tradeable swaps could become subject to the clearing mandate and only swaps subject to the clearing mandate would be subject to the trade execution mandate, there was no need for any CFTC action at all to implement the trade execution mandate. Either a SEF makes the swap available to trade or not. Neither the CFTC nor the SEC has taken this approach. Instead, both agencies treat the MAT issue as turning on some form of criteria and determination by those other than the two parties to the swap trade. Some statutory support for that view point is found in the provisions of Dodd-Frank that refer to the listing of swaps. 9 The argument is that unless Congress intended "listing a swap" and "making a swap available to trade" to be equivalent concepts, Congress 7 The statutory text of the trade execution mandate for swaps reads: "(A) IN GENERAL. With respect to transactions involving swaps subject to the clearing requirement of paragraph (1), counterparties shall (i) execute the transaction on a board of trade designated as a contract market under section 5; or (ii) execute the transaction on a swap execution facility registered under 5h or a swap execution facility that is exempt from registration under section 5h(f)[sic] of this Act. (B) EXCEPTION. The requirements of clauses (i) and (ii) of subparagraph (A) shall not apply if no board of trade or swap execution facility makes the swap available to trade or for swap transactions subject to the clearing exception under paragraph (7)." Dodd-Frank 723(a), adding Commodity Exchange Act 2(h)(8). The reference to CEA 5h(f) is intended to be a reference to CEA 5h(g) For a parallel provision for SB swaps, see Dodd Frank 763(a), adding Exchange Act 3C(h). 8 9 For SB swaps, see Exchange Act 3C(b)(4); See also SEC Proposed Rule b-4(o)(5)-(6). In her Opening Statement to the CFTC's Fourth Open Meeting to Consider Final Rules Pursuant to the Dodd- Frank Act on September 8, 2011, CFTC Commissioner Sommers pointed out that the trade execution mandate hinges upon whether a SEF or DCM "makes a swap available to trade" whereas other statutory provisions in the statute turn on the phrases "list for trading" and "listing for trading." Commissioner Sommers stated that "[b]y using the phrase makes available for trading in Section 2(h)(8), Congress must have meant something different than list or listing for trading. " Available at < 3

5 must have intended more than mere SEF listing to trigger the trade execution mandate for swaps that must be cleared. 10 In any event, the following summarizes proposals by the CFTC and SEC to address the status of whether a swap or SB swap is made available to trade. Under these proposals, some swaps that must be cleared and are listed or offered for trading by SEFs would not be required to be traded and executed on a regulated market. CFTC's Initial "Made Available to Trade" Proposal: Approximately one year ago, the CFTC proposed rules to govern SEFs, including Proposed Rule that touches upon when a swap would be "made available to trade" on a SEF. See Core Principles and Other Requirements for Swap Execution Facilities, 76 Fed. Reg (Jan. 7, 2011). Proposed Rule 37.10(a) would require each SEF to review annually (or more frequently as requested by the CFTC) whether that SEF "has made a swap available for trading." In making this assessment, the SEF could take into consideration the following factors: 1. The frequency of transactions in this or similar swaps; 2. Open interest in this or similar swaps; and 3. Any other factor the CFTC requests. See Proposed Rule 37.10(b). Proposed Rule 37.10(c) would require that all SEFs "treat the swap as made available for trading" if at least one SEF has made that same swap or an economically equivalent swap available for trading. This proposal does not explain what is intended by having a SEF treat a swap as made available for trading when the swap is made available for trading on another SEF. The trade execution mandate applies to the parties to the swap, not the SEFs. This proposal also does not define the term "economically equivalent swap." Neither Proposed Rule nor any of the rules in the CFTC's proposal to govern the listing, trading and execution of swaps on DCMs addresses when a DCM would make a swap available to trade. See Core Principles and Other Requirements for Designated Contract Markets, 75 Fed. Reg (Dec. 22, 2010). SEC's Proposal: About a month after the CFTC proposed SEF rules, the SEC proposed rules to govern SB SEFs. See Registration and Regulation of Security-Based Swap Execution Facilities, 76. Fed. Reg (Feb. 28, 2011). In the preamble to the SB SEF proposed rules, the SEC proposed to interpret the status of being "made available to trade" to mean "something more" than the SB swap being listed on a SB SEF or an exchange. 76 Fed. Reg. at Here, the SEC proposed to determine whether a SB swap is made "available to trade" pursuant to objective measures that the SEC would propose once it has sufficient data. 76 Fed. Reg. at The SEC requested comment whether the objective measures could be based on overall volume in the SB 10 One possible answer to that concern would be that if a swap is listed on only one SEF (and no DCM) and a swap counterparty tries to trade and execute its side of the swap on the SEF, but can not find a counterparty there, then the swap counterparty is exempt from the trading mandate. That scenario would seem to be consistent with the statutory language as written. 4

6 swap, wherever executed, and whether there are a minimum number of transactions or notional value during a given period of time. 76 Fed. Reg. at The SEC did not explain whether it intended to review or approve the SB SEF's MAT determination. CFTC's Second Made Available to Trade Proposal: On December 5, 2011, the CFTC voted 4-to-1 to propose rules that concentrate solely on the process for determining whether a swap is made available to trade on a SEF or DCM. See Process for a Designated Contract Market or Swap Execution Facility to Make a Swap Available to Trade under Section 2(h)(8) of the Commodity Exchange Act, 76. Fed. Reg (Dec. 14, 2011). 11 The proposal provides that a SEF or DCM would make the determination whether a swap is "available to trade," subject to CFTC oversight. Specifically, under proposed rules and 38.12, a swap would not become subject to the trade execution mandate until: 1. A SEF or DCM reviews the swap, taking into account any factor the SEF or DCM may consider to be relevant, including any one or more of the following seven factors: i. Whether there are ready and willing buyers and sellers; ii. The frequency or size of transaction on SEFs, DCMs or bilateral transactions; iii. The trading volume on SEFs, DCMs or of bilateral transactions; iv. The number and types of market participants; v. The bid/ask spread; vi. The usual number of resting firm or indicative bids and offers; or vii. Whether a SEF's trading system or platform or a DCM's trading facility will support trading in the swap; 2. The SEF or DCM determines that it makes the swap available to trade and documents in writing the basis for its analysis; 3. The SEF or DCM submits its determination and analysis to the CFTC and either requests that the CFTC approve its submission pursuant to CFTC Rule 40.5 or self-certifies that its submission complies with the rules pursuant to CFTC Rule 40.6; and 4. The CFTC reviews and approves a submission filed for approval (45 or 90 day process) 12 or reviews and does not disturb a self-certified submission (10 day process) The CFTC Commissioner that opposed this proposal was Jill Sommers. In an opening statement, Commissioner Sommers expressed concerns that a single SEF or DCM could "bind the entire marketplace to a trade execution requirement through an ill-defined analysis that the Commission will be unable to reject unless it finds that the determination is inconsistent with the Act or Commission regulations" and that "[g]iven the lack of any mandatory, objective criteria contained in the rules, it is difficult to envision how the Commission could find a made-available-for-trading determination to be inconsistent with the Act or regulations." See Commissioner Jill Sommers' Opening Statement Before the Sixth Open Meeting to Consider Final Rules Pursuant to the Dodd-Frank Act on December 5, 2011, available at < CFTC Rules 40.5 provides that the CFTC determine whether to approve submissions sent for CFTC approval within 45 days of receipt, except that the CFTC may spend 45 extra days reviewing proposals that raise novel or (cont'd) 5

7 At that time, all SEFs and DCMs that list or offer for trading the swap or any "economically equivalent swap" would be required to make those swaps available to trade. See Proposed Rules 37.10(c)(1) and 38.12(c)(1). (Again, the CFTC proposal does not explain what that concept entails. Counterparties not SEFs are subject to the trade execution mandate.) Each SEF or DCM would determine whether a swap it lists or offers for trading is economically equivalent to another swap after considering each swap's material pricing terms. See Proposed Rules 37.10(c)(2) and 38.12(c)(2). Each SEF and DCM would also be required to conduct an annual review and assess for each swap it has made available to trade whether the swap should continue to be made available based on the factors specified in Proposed Rules 37.10(b) and 38.12(b). See Proposed Rules 37.10(d) and 38.12(d). The annual review would need to be documented in writing and submitted to the CFTC. See Proposed Rules 37.10(d)(3) and 38.12(d)(3). Issues with the CFTC's Recent Proposal Is The CFTC's Recent Proposal Consistent with Dodd-Frank? Would It Reduce the Number of Swaps That Become Subject to the Trade Execution Mandate? A key goal of Dodd-Frank is to promote the trading of swaps on SEFs. Dodd-Frank 733, adding CEA 5h(e). Consistent with this goal, Dodd-Frank requires that non-exempt market participants that enter into swaps that are required to be cleared must trade and execute these swaps on a SEF or DCM if a SEF or DCM makes these swaps available to trade. Dodd-Frank 723(a), adding CEA 2(h)(8). But the CFTC's proposal would not require trading on a SEF or DCM for every swap that is listed by, and even traded on, a SEF once the swap is required to be cleared. Instead, the trade execution mandate would attach only to those swaps that would complete the CFTC's process. This approach would delay the implementation of the trade execution mandate, a result that would clash with the plain meaning of the text and spirit of Dodd-Frank. Under the CFTC's proposed process, some SEFs would likely face pressure from market participants not to make or submit a "made available to trade" determination. If SEFs yield to this pressure, swaps listed or offered for trading on those SEFs could continue to be primarily executed through private, bilateral negotiations and fewer swaps would become subject to the trade execution mandate. Exempt SEFs raise additional issues. Under Dodd-Frank ( 733, adding CEA 5h(g)), a SEF that the CFTC has found to be subject to comparable regulation by the SEC, a prudential regulator or the SEF's home country is exempt from CFTC registration. Under CEA 2h(8), a swap that is made available to trade by any SEF would be subject to the trade execution mandate if that swap is required to be cleared. But an exempt SEF is not a registered entity and thus is not able to submit a "made available to trade" determination for voluntary approval or via self- (cont'd from previous page) complex issues or are of major economic significance. The entity that made the submission may also allow the CFTC to take additional time to review. 6

8 certification (described as step #3 above). Only registered entities are eligible to submit determinations for voluntary approval or through self-certification under CFTC Rules 40.5 and This would mean that swaps listed only on exempt SEFs could never become subject to the trade execution mandate, even though swaps traded on exempt SEFs could satisfy the trade execution mandate. Does the CFTC's Recent Proposal Use CFTC Resources to do the Same Work Twice? The CFTC's recent proposal could be said to require the CFTC to do the same work twice. The CFTC is already required by law to review whether a swap has, among other things, significant outstanding notional exposures, trading liquidity and adequate pricing data, before the swap may become subject to the clearing mandate. The proposed requirement that the CFTC take a second look at a traded swap the CFTC has already determined meets the liquidity standard for clearing could be seen as an unwarranted expense of the CFTC's valuable, limited resources. It is unknown how many swaps would be subject to these submitted determinations. But it would not be surprising if many hundreds of MAT determinations were submitted for CFTC review or approval, followed by hundreds of resulting annual submissions by SEFs. Would the CFTC's Recent Proposal Impose Undue Costs on SEFs and Hinder the Trading of Swaps on SEFs? The CFTC's recent proposal would require SEFs to allocate substantial resources towards MAT determinations and assessments. For example, every time any SEF or DCM decides to make a swap available to trade, each SEF would need to determine whether it lists that swap or any swaps that are economically equivalent to the swap. If so, the SEF would presumably be required to assess those swaps, reach the pre-canned determination that the SEF also makes the swaps available to trade and file the requisite submissions for self-certification or CFTC approval. Imposing unwarranted costs on SEFs may create barriers to entry that prevent entities intending to register as SEFs from ultimately becoming SEFs. Fewer SEFs would mean qualified market participants have less choice in regulated trading platforms. This result would be inconsistent with a key goal of Dodd-Frank to promote the trading of swaps on SEFs. Dodd- Frank 733, adding CEA 5h(e). Is the CFTC's Recent Proposal Inconsistent with CFTC Rules and the Goal of Legal Certainty? The term "economically equivalent swap," which the CFTC uses in its recent proposal, does not appear anywhere in Dodd-Frank. Proposed rules 37.10(c)(2) and 38.12(c)(2) loosely define this term, as it is used in the CFTC's rules regarding the made available to trade determination, to mean a swap that the SEF or DCM determines to be "economically equivalent" with another swap after consideration of each swap's material pricing terms. The CFTC has also used the term "economically equivalent swap" in its final position limit rules. While it is not entirely clear how it would be determined whether two swaps are economically equivalent under the CFTC's final position limit rules, it is unlikely that swaps found to be economically equivalent under the CFTC's position limit rules would always also be found to be economically 7

9 equivalent under the CFTC's "made available to trade" rules. Using a single term in different CFTC rules in way that defines the same term inconsistently across CFTC rules would lead to confusion and legal uncertainty. 13 Is There a Better Approach to MAT? The CFTC could apply the statute as Congress wrote it. If the CFTC decides a process is needed regarding the trade execution mandate, a simple notification process should be sufficient. The CFTC could fold this notification process into its notification process for the clearing mandate. That is, when the CFTC provides notice to the public that it is considering requiring a swap to be cleared, the CFTC could also notify the public of the names of any SEFs or DCMs that intend to list or offer for trading that swap and will thus make the swap "available to trade." Then, if the CFTC ultimately determines that the swap is required to be cleared, the CFTC should post the names of any SEFs or DCMs on its website that have notified the CFTC in writing that they make the swap available for trading. This process would be consistent with Congressional intent, promote the trading of swaps on SEFs, provide transparency and preserve resources for all concerned. 13 Commissioner Sommers also pointed out that the CFTC's proposal does not make clear what an economically equivalent swap would be and that this lack of clarity is problematic. See Commissioner Jill Sommers' Opening Statement Before the Sixth Open Meeting to Consider Final Rules Pursuant to the Dodd-Frank Act, (Dec. 5, 2011), available at< Also, when the CFTC considered and adopted the real-time reporting rules (in which CFTC Rule 43.4(d)(4)(ii)(B) uses the term "economically related"), Commissioner Jill Sommers noted in her opening statement that "[d]efining economically related, economically fungible and economically equivalent in a consistent way across all rules is important. If critical terms such as these are used in multiple places in Commission rules, the terms should have the same meaning each time they are used. I am not sure we have fully articulated definitions of these three very similar, yet different terms." See Opening Statement of CFTC Commissioner Jill Sommers Before the Seventh Open Meeting to Consider Final Rules Pursuant to the Dodd-Frank Act, (Dec. 20, 2011) available at < 8

10 DOUGLAS E. HARRIS Douglas E. Harris is a Managing Director in the New York office of Promontory Financial Group, L.L.C., where he advises banks, hedge funds and futures commission merchants and other types of financial institutions on regulatory, compliance, risk management, derivatives and capital markets issues. Formerly, he was the General Counsel and Chief Operating Officer of BrokerTec Futures Exchange, L.L.C. and BrokerTec Clearing Company, L.L.C. Before joining BrokerTec, Mr. Harris was a partner in the Regulatory Risk Services and Derivatives and Treasury Risk Managements Groups at Arthur Andersen LLP. From 1993 to 1996, he held the position of Senior Deputy Comptroller for Capital Markets at the Office of the Comptroller of the Currency. Previously, Mr. Harris served as Assistant General Counsel of JPMorgan and General Counsel of JPMorgan Futures, Inc. Mr. Harris is a Director of the National Futures Association, the self-regulatory organization for the U.S. futures industry, where he is a member of the Executive Committee, the Audit Committee and the Compliance Consultative Committee and the Audit Committee. He is also a member of the Commodity Futures Trading Commission s Technology Advisory Committee; the Bar Association of the City of New York; the New York State Bar Association (Structured Products and Derivatives Law Committee); the American Bar Association (Committee on the Regulation of Futures and Derivatives); the Law & Compliance Division of the Futures Industry Association; and the Financial Markets Association.

11 Annette L. Nazareth PARTNER tel Ms. Nazareth is a Davis Polk partner practicing in the firm s Financial Institutions Group in the Washington DC office. She advises clients across a broad range of complex regulatory matters and transactions. She also works closely with Davis Polk s SEC enforcement practice, counseling non-financial sector corporations that are subject to government regulatory and enforcement actions. Bar Admissions District of Columbia State of New York Education A.B., History/Economics, Brown University, 1978 magna cum laude Phi Beta Kappa J.D., Columbia Law School, 1981 Harlan Fiske Stone Scholar Ms. Nazareth was a key financial services policymaker for more than a decade. She joined the SEC Staff in 1998 as a Senior Counsel to Chairman Arthur Levitt and then served as Interim Director of the Division of Investment Management. She served as Director of the Division of Market Regulation (now the Division of Trading and Markets) from 1999 to As Director, she oversaw the regulation of broker-dealers, exchanges, clearing agencies, transfer agents and securities information processors. In 2005, she was appointed an SEC Commissioner. During her tenure at the Commission, she worked on numerous groundbreaking initiatives, including execution quality disclosure rules, implementation of equities decimal pricing, short sale reforms and modernization of the national market system rules. Ms. Nazareth also served as the Commission s representative on the Financial Stability Forum from 1999 to Since leaving the SEC in January 2008, she has served as Rapporteur for the Group of Thirty s report, The Structure of Financial Supervision: Approaches and Challenges in a Global Marketplace and as Project Director for their report, Enhancing Financial Stability and Resilience: Macroprudential Policy, Tools and Systems for the Future. Earlier in her career, she held a number of senior legal positions at several investment banks. RECOGNITION Ms. Nazareth is recognized as a leading lawyer in Chambers USA: America s Leading Lawyers for Business. OF NOTE [Use Heading 2 style for second level heading] PROFESSIONAL HISTORY Partner, Davis Polk, 2008-present Commissioner, Securities and Exchange Commission, Director, Division of Market Regulation (now the Division of Trading and Markets), Securities and Exchange Commission, Senior Counsel, Chairman Arthur Levitt; Interim Director, Division of Investment Management, Securities and Exchange Commission, Associate, Davis Polk, Davis Polk & Wardwell LLP

12 ROBERT G. PICKEL Chief Executive Officer INTERNATIONAL SWAPS AND DERIVATIVES ASSOCIATION, INC. (ISDA) Robert G. Pickel is Chief Executive Officer of the International Swaps and Derivatives Association, Inc., a position he previously held from 2001 to He served as Executive Vice Chairman from 2009 to 2011 and as General Counsel from 1997 to Prior to joining ISDA, Mr. Pickel was Assistant General Counsel in the Legal Department of Amerada Hess Corporation, an international oil and gas company, from 1991 to He has also worked at the law firm of Cravath, Swaine & Moore in New York and London, where he represented ISDA in a variety of matters. Mr. Pickel graduated from Williams College and received his law degree from New York University.

13 Kenneth M. Raisler Kenneth Raisler is head of Sullivan & Cromwell s Commodities, Futures and Derivatives Group. The Group is responsible for a full range of regulatory, transactional and litigation advice in the commodities, securities and banking areas to its brokerage, investment banking, banking and commercial clients. Mr. Raisler was an assistant U.S. attorney for the District of Columbia from 1977 to 1982 in the Criminal and Civil Divisions. He then joined the Commodity Futures Trading Commission as deputy general counsel and was the general counsel of the Commission from 1983 to Mr. Raisler was the chairman of the New York City Bar Committee on Futures Regulation from 1988 to He currently is vice chair of the ABA Derivatives and Futures Law Committee. He was a member of the Working Group of The Group of Thirty Derivatives Project. Since 1992, he has been a member of the board of directors of the Futures Industry Association. He also is a member of the board of directors of the Managed Funds Association. Mr. Raisler is a member of the board of trustees of NYU School of Law and chair of the board s Development Committee. He also is chairman of the board of The Way to Work, a nonprofit youth education and job training organization. Rankings and Recognitions Best Lawyers 2012 New York City Derivatives and Futures Law Lawyer of the Year Chambers Global: The World s Leading Lawyers for Business Derivatives ( , , , 2003, , 2006, 2007, 2008, 2009, 2010, 2011) Chambers USA: America s Leading Lawyers for Business Derivatives ( , 2004, 2005, 2006, 2007, 2008, 2009, 2010, 2011) PLC Cross-border Capital Markets Handbook (2009) SC1: Contact Kenneth M. Raisler 125 Broad Street New York, NY Phone: Fax: raislerk@sullcrom.com Website:

14 PLC Cross-border Finance: Secured Lending Handbook ( , , ) PLC Which Lawyer? Yearbook ( , , , 2005, 2006, 2007, 2008, 2009, 2010, 2011) The Best Lawyers in America (2006, 2007, 2008, 2009, 2010, 2011) The Lawdragon 3000: Leading Lawyers in America ( ) New York Super Lawyers Securities and Corporate Finance (2006, 2007, 2008, 2009, 2010, 2011) Education 1976, New York University School of Law, J.D. 1973, Yale University, B.S. Recruiting Fun Fact None provided SC1:

15 Biography Jerrold E. Salzman Of Counsel Skadden, Arps, Slate, Meagher & Flom LLP Commodities and Futures Regulation and Litigation Jerrold E. Salzman concentrates in futures regulation and litigation. He was cofounder and partner of Freeman, Freeman and Salzman, P.C., where he practiced for 40 years. Mr. Salzman successfully has counseled and defended the Chicago Mercantile Exchange in a number of antitrust, employment, contract, patent and other matters. He also has represented clients in disciplinary proceedings before federal agencies and self-regulatory organizations in addition to an extensive securities, commercial litigation and arbitration practice. Antitrust Litigation Experience Chicago Office T: F: E: jerrold.salzman@skadden.com Education LL.B., Harvard Law School, 1965 (cum laude; Editor, Harvard Law Review) B.A., University of Michigan, 1962 (with high distinction; Phi Beta Kappa) Corrugated Container Antitrust Litigation, M.D.L. 310 (S.D. Tex.) (lead trial attorney for 13-week jury trial representing opt-out plaintiffs Armour & Company, Anchor Hocking Corporation, Kraft, Inc. and Wilson Foods Corporation); Sugar Antitrust Litigation, M.D.L. 201 (N.D. Cal.) (on behalf of governmental classes); Broiler Chicken Antitrust Litigation, No. C A (N.D. Ga.) (on behalf of the State of Illinois and private purchasers); Armored Cars Antitrust Litigation, M.D. L. 318 (N.D. Ga.) (on behalf of Hillman s and Jewel Foods Company); Cast Iron Pipe Antitrust Litigation, C.A. No (N.D. Ga.) (lead counsel in a multidistrict class action on behalf of Illinois, Indiana and the Commonwealth of Pennsylvania); Benzothiadiazine (Commonwealth of Pennsylvania v. Ciba Corp.) (N.D. Ill.) (on behalf of the Commonwealth of Pennsylvania); and Hillman s, Inc. v. Gonella (N.D. Ill.) (on behalf of Hillman s, Inc.). (continued) Professional Experience Partner and co-founder, Freeman, Freeman & Salzman, P.C. ( ) Associate, Mayer, Brown & Platt ( ) Authorships SEC/CFTC Merger Is It Still the Same Debate?, Futures & Derivatives Law Report (January 2008) Unnatural Monopolies: The Aftermath of the Shad/Johnson Accord, Derivatives Quarterly (Summer 1999) The Cost of Refusing to Define: Jurisdictional Turmoil and Litigation, Futures & Derivatives Law Report, Vol. 18, No. 1 (March 1998) Commentary: A Brief Appreciation of the OTC/Exchange Collision, Futures & Derivatives Law Report, Vol. 19, No. 2 (April 1999) Improper Application of Shad-Johnson to Foreign Stock Index Futures and Options, Derivatives Quarterly, Vol. 3, No. 3, pg. 23 (Spring 1997)

16 Biography Jerrold E. Salzman Commodities and Securities Regulation Mr. Salzman has advised the Chicago Mercantile Exchange and International Monetary Market in commodities and securities regulation matters. Representative matters include: Ricci v. Chicago Mercantile Exchange, 409 U.S. 389 (1973) Arenson v. Chicago Mercantile Exchange, No. 71 C 854 (N.D. Ill.) Chicago Mercantile Exchange v. Deaktor, 414 U.S. 133 (1973) Phillips v. Chicago Mercantile Exchange (N.D. Ill. 1979) DeRance, Inc. v. Paine, Webber, Jackson & Curtis, Inc., 85 C 0041 (E.D. Wis.) Joseph Bianco v. Texas Instruments, Inc., 85 C 376 (N.D. Ill.) In Re Financial Partners Class Action Litigation, 82 C 5910 (N.D. Ill.) Commercial Litigation Mr. Salzman has represented such clients as DeLeuw Cather & Company, an engineering firm; Harshe Rotman & Druck, a public relations firm; and McDonald s Corporation. Mr. Salzman has been selected for inclusion in Chambers Global: The World s Leading Lawyers for Business, Chambers USA: America s Leading Lawyers for Business and The Best Lawyers in America. He was named Best Lawyers 2012 Chicago Derivatives and Futures Law Lawyer of the Year. Authorships (continued) Cash Settlement for Futures Contracts Based on Common Stock Indices: An Economic and Legal Perspective, The Journal of Futures Markets, co-authored by Terrence F. Martel, Vol. 1, No. 3 (Fall 1981) Judicial Review of CFTC s Invocation of Emergency Powers, The Journal of Futures Markets, co-authored by Daniel A. Clune, Supplement to Vol. 1 (1981) The Effect of Contribution on Litigation and Settlement: The Plaintiff s Viewpoint, Antitrust Law Journal, Vol. 48, Issue 4 Colloquy on Complex Litigation, Brigham Young University Law Review, Vol No. 3 Bar Admissions Illinois U.S. Court of Appeals for the Seventh Circuit U.S. District Court Northern District of Illinois

17 Biography Mark D. Young Partner Skadden, Arps, Slate, Meagher & Flom LLP Derivatives Regulation and Litigation Mark D. Young s practice focuses on financial services regulation, derivatives and agency litigation, legislative advocacy, and business and transactional counseling. In the area of financial services regulation, Mr. Young represents major corporations, exchanges, trading platforms, brokerage houses, banks, pension organizations and investment managers before the Commodity Futures Trading Commission (CFTC), the Securities and Exchange Commission (SEC), the Department of Labor (DOL) and federal banking agencies. He is actively advising clients on the development of federal regulatory policy on all forms of derivatives under the Dodd- Frank Act. In the derivatives litigation area, he successfully argued appeals in landmark cases under the federal securities laws and the Commodity Exchange Act. Those decisions addressed jurisdiction of the CFTC, SEC and bank regulators over newly created derivatives and other financial instruments; the scope of the definition of a security ; the availability of private damage actions; extraterritorial application of U.S. securities and futures laws; the standards of liability for fraud and manipulation; electronic trading markets; and the scope of fiduciary obligations of brokerage firms and banks. Mr. Young also has experience in agency litigation defending government enforcement actions involving fraud, manipulation, reporting and registration violations. Mr. Young, who is a former CFTC assistant general counsel, is active in a wide range of legislative issues. He played a lead role in connection with every major piece of legislation to amend the Commodity Exchange Act, the statute administered by the CFTC, since These bills have focused on financial regulatory reform, swaps and other derivatives, energy prices and jurisdictional disputes between the CFTC and the SEC. Mr. Young also represents major pension funds in connection with their use of the swaps, futures and options markets to manage the risk of future price changes in stocks, interest rates and currencies. Mr. Young repeatedly has been listed in the derivatives law category of The Best Lawyers in America. Washington, D.C. Office T: F: E: mark.d.young@skadden.com Education J.D., Georgetown University Law Center, 1977 B.A., Tufts University, 1974 (magna cum laude) Bar Admissions District of Columbia Government Service Assistant General Counsel, U.S. Commodity Futures Trading Commission ( ) Professional Experience Adjunct Professor, Securities Regulation Graduate Program, Seminar in Regulation of Derivatives, Georgetown University Law Center ( ) Selected Authorships Different Roads to Clarity For Swap Markets, Law360, June 30, 2011 CFTC and SEC Take Different Roads to Provide Clarity and Avoid Disruption to Swap Markets, Skadden, Arps, Slate, Meagher & Flom LLP, June 21, 2011 CFTC Votes to Delay Dodd-Frank Swaps Provisions, Skadden, Arps, Slate, Meagher & Flom LLP, June 15,