SEC and CFTC Adopt Product Definitions Under Title VII of Dodd-Frank
|
|
- Chad Johns
- 5 years ago
- Views:
Transcription
1 SEC and CFTC Adopt Product Definitions Under Title VII of Dodd-Frank The SEC and CFTC Voted to Further Define Swap, Security-Based Swap, and Security-Based Swap Agreement and Finalize Related Requirements; CFTC Finalizes End-User Exception SUMMARY The Securities Exchange Commission ( SEC ) and the Commodity Futures Trading Commission ( CFTC, jointly with the SEC, the Commissions ) have approved joint final rules and interpretations that, among other things, further define swap and security-based swap and govern mixed swaps. The definitions of swap, security-based swap and mixed swaps will determine the applicability of many of the regulatory requirements imposed under the Dodd-Frank Wall Street Reform and Consumer Protection Act. Although the release adopting the final rules (the Product Final Release ) is not yet available, the SEC and CFTC have each released a fact sheet and the CFTC has released a Q&A, which discuss the Product Final Release selectively and at a high level (collectively, the Product Fact Sheet ). Separately, the CFTC published a fact sheet and Q&A that discuss, again selectively and at a high level, the end-user exception to the clearing and platform execution requirements that will be applicable to certain swaps (collectively, the End-User Fact Sheet ). Our memorandum reflects (and is limited to) the information made available in the Product Fact Sheet and the End-User Fact Sheet, with a focus on how the two relevant rulemakings appear to have evolved since being proposed. 1 We will supplement this memorandum with a more comprehensive memorandum after the Product Final Release is made available. New York Washington, D.C. Los Angeles Palo Alto London Paris Frankfurt Tokyo Hong Kong Beijing Melbourne Sydney
2 PRODUCT DEFINITION Insurance Products Consistent with the proposing release for the product definitions (the Proposing Release ), the Product Fact Sheet indicates that insurance transactions will be excluded from the definition of swap and security-based swap provided such transactions: are in a product that either meets certain conditions ( Product Conditions ) or is one of a number of listed traditional insurance products ( Enumerated Products ), and meet certain conditions relating to the provider of the product ( Provider Conditions ). With two exceptions, there is no indication of substantial changes to the Provider Conditions within the Product Fact Sheet. The two changes expand the Provider Conditions to cover non-admitted insurers (i.e., providers of excess/surplus lines insurance) that are located outside the United States and listed on the Quarterly Listing of Alien Insurers (as maintained by the National Association of Insurance Commissioners) or that meet the eligibility criteria for non-admitted insurers under applicable state law and to eliminate the proposed requirement that the insurance provider be an insurance company whose primary and predominant activity is the writing of insurance or reinsurance. The Product Conditions will remain substantially the same as those proposed in the Proposing Release. With respect to the Enumerated Products, which are certain traditional insurance products excluded from the definition of "swap" and "security-based swap" (provided that the Provider Conditions are met), the Product Fact Sheet indicates that these will be identified in the final rules (as opposed to in the interpretive guidance as was the case in the Proposing Release). The Enumerated Products identified by the Product Fact Sheet are surety bonds; fidelity bonds; life insurance; health insurance; long-term care insurance; title insurance; property and casualty insurance; annuities (irrespective of their tax treatment); disability insurance; insurance against default on individual residential mortgages (i.e. private mortgage insurance); and reinsurance or retrocession of any of the listed Enumerated Products so long as it is not accomplished by entering into swaps or security-based swaps. Based on the Product Fact Sheet, the Product Final Release will confirm that the safe-harbor for insurance products is non-exclusive, meaning that transactions that do not meet the Product Conditions, are not in an Enumerated Product, or do not meet the Provider Conditions may nevertheless be excluded from the definitions of swap and security-based swap under a facts and circumstances analysis. The Product Fact Sheet also indicates that the Commissions are including a grandfather provision in the final rules, which provides that a transaction entered into on or before the effective date of the product definitions will not fall within the definition of swap or security-based swap provided that, at the time it was entered into, the transaction met the Provider Conditions. -2-
3 Guarantees The Product Final Release will include an interpretation by the CFTC that the term swap includes a guarantee of a swap, to the extent that a counterparty to the guaranteed swap would have recourse against the guarantor. The CFTC expects to address the practical implications of this interpretation, including applicable reporting requirements, in a separate rulemaking. In contrast, the Product Fact Sheet indicates that the SEC will treat guarantees of security-based swaps as separate securities. This is consistent with the SEC s historical approach to the treatment of guarantees of securities. The SEC plans to address the reporting of guarantees of security-based swaps in a separate rulemaking. Loan Participations The Product Final Release will provide that loan participations are not swaps or security-based swaps if the participation purchaser is acquiring a current or future direct or indirect ownership interest in the related loan or commitment subject to satisfaction of certain conditions to be specified in the Product Final Release. The Product Fact Sheet also indicates that the requirement in the Proposing Release that a loan participation be a true participation is not carried forward. Forward Exclusion from the Swap Definition for Nonfinancial Commodities The definition of swap added by the CEA excludes any sale of a nonfinancial commodity... for deferred shipment or delivery, so long as the transaction is intended to be physically settled (the forward contract exclusion ). The Product Final Release will include a CFTC interpretation clarifying the scope of the forward contract exclusion. In particular, the forward contract exclusion will be interpreted in a manner consistent with the CFTC s historical exclusion of forwards from the prohibition of off-exchange futures contracts. This historical exclusion viewed transactions by commercial market participants that regularly make or take delivery of the referenced commodity in the ordinary course of their business as forward contracts, notwithstanding that the relevant transaction might later be settled by book out or another means not involving physical settlement provided that the book out or other form of settlement is effectuated through a subsequent, separately negotiated agreement. The Product Final Release will provide that oral book outs are permissible if they are followed in a commercially reasonable timeframe by a written or an electronic confirmation. The Product Fact Sheet suggests that exempt and agricultural commodities that may be physically delivered as well as certain environmental commodities will be treated as nonfinancial commodities and, therefore, will be eligible for the forward contract exclusion. The Product Fact Sheet indicates that certain contract provisions (such as liquidated damage provisions and renewal/evergreen provisions) will not disqualify a transaction from the forward contract exclusion. The Product Fact Sheet also indicates that, in certain limited circumstances, forwards with embedded volumetric optionality will be within the forward contract exclusion. This contrasts with the Proposing Release, which covered price optionality only. We expect that, where the volumetric optionality is based -3-
4 on physical factors or regulatory requirements beyond the control of the parties, a transaction containing such optionality would be able to qualify for the forward contract exclusion provided that the conditions to the exclusion were otherwise satisfied. In the Proposing Release, the CFTC stated that it would retain the 1990 Brent interpretation with respect to certain energy transactions, but would rescind the 1993 Energy Exemption. Comments received by the CFTC urged retention of the Energy Exemption. Although the Product Final Release will rescind the Energy Exemption, the Product Final Release will recognize the types of settlement that may be utilized in connection with forward contracts to include netting of quantities and other approaches that reduce or obviate delivery obligations, as provided in the 1993 Energy Exemption. Transactions that are Swaps or Security-Based Swaps As expected, the Product Final Rules will confirm that foreign exchange forwards and foreign exchange swaps ( FX Products ) will be swaps, absent a determination by the Secretary of the Treasury to exempt them. If exempted, FX Products would remain subject to certain requirements under the CEA, including certain reporting requirements and business conduct standards. The Commissions are issuing an interpretation providing that certain foreign exchange spot transactions will not be treated as foreign exchange forwards under the CEA. The transactions include certain foreign currency trades made in connection with a foreign securities transaction that is settled within the settlement cycle for the associated securities transaction. In addition, the Final Product Release will contain an interpretation that retail foreign currency options described in Section 2(c)(2)(B) of the CEA are not swaps. The Commissions also are issuing an interpretation that options on swaps or security-based swaps will be swaps or security-based swaps. Moreover, the Final Product Release will clarify that forward rate agreements, notwithstanding their forward label, are swaps (unless otherwise excluded by statute). Relationship Between Swaps and Security-Based Swaps The Commissions appear largely to have adopted the rules relating to the definition of security-based swaps and the relationship between security-based swaps and swaps as proposed. Similar to the proposed rules, the determination as to whether a transaction is a swap or a security-based swap will be made, at the latest, at the time when the offer to enter into the transaction is made. The transaction will remain a swap or security-based swap throughout its life (subject to regulation by the relevant regulator). For example, if a narrow-based security index becomes a broad-based security index after the determination is made, that instrument will remain under the jurisdiction of the SEC as a securitybased swap. The opposite is true for broad-based security indexes. -4-
5 The Product Final Release will provide guidance regarding the terms narrow-based security index and issuers of narrow-based security index, as well as guidance with respect to the meaning of index. The Product Fact Sheet indicates that a credit default swap on a broad-based index will be treated as: a mixed swap if it provides for mandatory physical settlement; or a swap if it provides for cash or auction settlement. The Product Final Release will establish a procedure whereby the parties to an instrument may request a joint interpretation by the Commissions regarding whether the relevant instrument is a swap or a securitybased swap. Treatment of Instruments Based on Rates or Yield The Products Final Release will provide that instruments based on interest rates and other monetary rates are swaps. Instruments based on yields (where yield is a proxy for the price or value of a debt security, loan or narrow-based security index) are security-based swaps; provided that an instrument on a yield of US Treasuries or other exempted securities (other than municipal securities) would be a swap rather than a security-based swap. According to the Product Fact Sheet, a total rate of return swap based on two or more loans will be a swap subject to CFTC regulation. Mixed Swaps As was the case under the Proposed Rules, the category of mixed swaps will be very narrow and intended to ensure that there are no gaps in the regulation of swaps and security-based swaps. A bilateral, uncleared mixed swap will be a transaction that is both a swap and a security-based swap. Mixed swaps with dealers and major participants registered with both the CFTC and SEC as a counterparty will be subject to key provisions of the CFTC rules and requirements of the federal securities laws. All other mixed swaps will be regulated either: pursuant to a joint order from the Commissions determining whether the mixed swap will be governed by the CEA and/or the Exchange Act; or by the parallel requirements of both the CEA and the Exchange Act. Effectiveness The Product Fact Sheet indicates that the product definitions will become effective 60 days after publication in the Federal Register except that certain interim relief provided by the SEC under the Exchange Act, the Trust Indenture Act of 1939 and the Securities Act of 1933 will remain in effect for 180 days after such publication. Effectiveness of the product definitions will begin the countdown to effectiveness of other regulations that were tied to the product definitions. -5-
6 END-USER EXCEPTION Under Title VII, mandatory clearing and platform execution obligations will be imposed with respect to certain swaps, subject to an elective exception generally available where a non-financial end-user is entering into a swap to hedge or mitigate commercial risk and meets certain procedural requirements (the end-user exception ). If an end-user seeking to rely on this exception is an SEC filer, it must, in addition to meeting the other conditions to qualifying for the exception, obtain board-level approval to enter into uncleared swaps. Language in the End-User Fact Sheet suggests that this approval may be provided generally rather than on a transaction-by-transaction basis. The End-User Fact Sheet also indicates that the CFTC adopted an exemption from the definition of financial entity applicable to banks, savings associations, farm credit system institutions, and credit unions with total assets of $10 billion or less. As a result, such institutions will be eligible for the end-user exception; provided that its other conditions are met. * * * ENDNOTES 1 The proposing release for the product definitions is discussed in our Memorandum to Clients, dated May 12, 2011, entitled Proposed Product Definitions Under Title VII of Dodd-Frank: CFTC and SEC Propose Rules and Guidance to Further Define the Terms Swap, Security-Based Swap, and Mixed Swap. Copyright Sullivan & Cromwell LLP
7 ABOUT SULLIVAN & CROMWELL LLP Sullivan & Cromwell LLP is a global law firm that advises on major domestic and cross-border M&A, finance, corporate and real estate transactions, significant litigation and corporate investigations, and complex restructuring, regulatory, tax and estate planning matters. Founded in 1879, Sullivan & Cromwell LLP has more than 800 lawyers on four continents, with four offices in the United States, including its headquarters in New York, three offices in Europe, two in Australia and three in Asia. CONTACTING SULLIVAN & CROMWELL LLP This publication is provided by Sullivan & Cromwell LLP as a service to clients and colleagues. The information contained in this publication should not be construed as legal advice. Questions regarding the matters discussed in this publication may be directed to any of our lawyers listed below, or to any other Sullivan & Cromwell LLP lawyer with whom you have consulted in the past on similar matters. If you have not received this publication directly from us, you may obtain a copy of any past or future related publications from Jay T. Plum ( ; plumj@sullcrom.com) in our New York office. CONTACTS New York David J. Gilberg gilbergd@sullcrom.com Marion Leydier leydierm@sullcrom.com Kenneth M. Raisler raislerk@sullcrom.com Robert W. Reeder III reederr@sullcrom.com Andrew S. Rowen rowena@sullcrom.com Rebecca J. Simmons simmonsr@sullcrom.com Washington, D.C. Eric J. Kadel, Jr kadelej@sullcrom.com Robert S. Risoleo risoleor@sullcrom.com Dennis C. Sullivan sullivand@sullcrom.com -7- SC1: O
SEC Exemptive Relief in Connection with Effective Date of Title VII of Dodd-Frank
SEC Exemptive Relief in Connection with Effective Date of Title VII of Dodd-Frank SEC Issues Interim Final Rules and Order to Provide Relief from Certain Provisions That Would Be Effective on July 16,
More informationClearing Exemption for Inter-Affiliate Swaps
CFTC Proposes Rule to Exempt Swaps between Certain Affiliated Entities from the Clearing Requirement under Dodd-Frank SUMMARY On August 16, 2012, the CFTC issued a proposed rule to exempt swaps between
More informationSEC Proposes Rule Regarding Communications Involving Security- Based Swaps Entered Into Solely by Eligible Contract Participants
SEC Proposes Rule Regarding Communications Involving Security- Based Swaps Entered Into Solely by Eligible Contract Participants SUMMARY On September 8, 2014, the Securities and Exchange Commission proposed
More informationCFTC Exemptive Relief Upon Effective Date of Title VII of Dodd-Frank
CFTC Exemptive Relief Upon Effective Date of Title VII of Dodd-Frank CFTC Issues Proposed Order to Provide Relief from Certain Provisions of Title VII That Would Be Effective on July 16, 2011 SUMMARY On
More informationCFTC Proposes to Amend CCO Rules
CFTC Proposes Amendments to Chief Compliance Officer Duties and Annual Reports SUMMARY On May 3, 2017, the Commodity Futures Trading Commission (the CFTC ) announced proposed amendments to its rules governing
More informationSecurity-Based Swap Execution Facilities
SEC Proposes Rules on Registration of Security-Based Swap Execution Facilities SUMMARY On February 2, 2011, the Securities and Exchange Commission (the SEC ) proposed Regulation SB SEF, 1 which sets forth
More informationImplementation of Title VII of Dodd-Frank
SEC Issues Proposed Rules to Mitigate Potential Conflicts of Interest in the Operation of Security-Based Swap Clearing Agencies, Security- Based Swap Execution Facilities and Security-Based Swap Exchanges
More informationSEC Provides Relief to Security-Based Swap Dealers From Business Conduct Rules
SEC Provides Relief to Security-Based Swap Dealers From Business Conduct Rules Relief From Certain Documentation Requirements Under the SEC s Business Conduct Rules Would Apply for Five Years After the
More informationBona Fide Hedge Exemptions for Commodity Swap Dealers
Bona Fide Hedge Exemptions for Commodity Swap Dealers CFTC Issues Concept Release Seeking Comment on Whether to Eliminate the Bona Fide Hedge Exemption for Certain Swap Dealers and Create a New Exemption
More informationSwap Execution Facility Requirements
CFTC Proposes Rules for SUMMARY The Commodity Futures Trading Commission (the CFTC ) has proposed rules setting forth requirements for Swap Execution Facilities ( SEFs ). 1 SEFs are a new type of regulated
More informationProposed Treasury Exemption for Foreign Exchange Swaps and Forwards
Proposed Treasury Exemption for Foreign Exchange Swaps and Forwards Treasury proposes to exempt foreign exchange swaps and foreign exchange forwards from the definition of swap under the Commodity Exchange
More informationProposed Dodd-Frank Section 945 Rules
SEC Proposes Requirements Regarding Review of Assets Underlying Asset-Backed Securities Offerings and Disclosure of Findings and Conclusions SUMMARY On October 13, 2010, the Securities and Exchange Commission
More informationConflicts of Interest in Securitizations
SEC Proposes Rule under Section 621 of the Dodd-Frank Act to Prohibit Securitization Participants from Engaging in Transactions Involving Material Conflicts of Interest with ABS Investors SUMMARY On September
More informationCFTC Federal Register Notice
Request for Public Comment on Areas of Rulemaking Under Title VII of the Dodd-Frank Act SUMMARY On August 26, 2010, the Commodity Futures Trading Commission (CFTC) issued the attached Federal Register
More informationProposed Dodd-Frank Section 943 Rules
SEC Proposes Disclosure Requirements Regarding Representations and Warranties in Asset-Backed Securities Offerings SUMMARY On October 4, 2010, the Securities and Exchange Commission proposed rules pursuant
More informationLegislation Affecting Energy Trading: Recent Developments
Legislation Affecting Energy Trading: Recent Developments The House fails to pass Rep. Peterson's Commodity Markets Transparency and Accountability Act of 2008," while the Senate considers Sen. Reid's
More informationAgencies Release New FAQ on CEO Certification Requirement, Setting March 31, 2016 Deadline for Initial Submissions
Agencies Release New FAQ on CEO Certification Requirement, Setting March 31, 2016 Deadline for Initial Submissions Earlier today, the Board of Governors of the Federal Reserve System (the Federal Reserve
More informationProposed Rules Under the Investment Advisers Act
Proposed Rules Under the Investment Advisers Act SEC Proposes Rules to Implement Dodd-Frank Act Registration Requirements for Advisers to Private Funds; Registration Exemptions for Venture Capital Funds,
More informationBrexit: U.S. Agencies Facilitate Legacy Swap Transfers
Brexit: U.S. Agencies Facilitate Legacy Swap Transfers Under Interim Final Rule, Legacy Swaps Currently Exempt from the Swap Margin Rule Would Maintain Legacy Status If Transferred from U.K. Financial
More informationCorporate Expatriation Transactions
IRS and Treasury Issue Regulations on the Substantial Business Activities Exception and Finalize Regulations on Surrogate Foreign Corporations Under Section 7874 SUMMARY On June 7, 2012, the IRS and the
More informationSEC Reopens Comment Period on Proposed Rules Regarding Security-Based Swaps
SEC Reopens Comment Period on Proposed Rules Regarding Security-Based Swaps SEC Reopens Comment Period and Requests Additional Comment on Previously Proposed Rules Regarding Capital, Margin and Collateral
More informationFederal Reserve Issues Statement of Intent to Extend the Volcker Rule Conformance Period Through July 21, 2017 for CLOs
April 8, 2014 Federal Reserve Issues Statement of Intent to Extend the Conformance Period Through July 21, 2017 for CLOs Late yesterday afternoon, the Board of Governors of the Federal Reserve System (the
More informationFinancial Services Advisory
Financial Services Advisory September 7, 2012 CFTC, SEC Finalize Product Definitions I. Introduction On July 9 and 10, 2012, the Commodity Futures Trading Commission and Securities and Exchange Commission
More informationCFTC Proposed Rules on Position Limits on Physical Commodity Derivatives
CFTC Proposed Rules on Position Limits on Physical Commodity Derivatives CFTC Adopts Proposed Rule during Public Meeting to Impose Position Limits on Futures and Swaps on Physical Commodities SUMMARY On
More informationLabCFTC Releases Primer on Virtual Currencies
LabCFTC Releases Primer on Virtual Currencies CFTC FinTech Hub Launches Educational Tool for Innovators and Clarifies Jurisdiction Over Virtual Currencies SUMMARY On October 17, 2017, LabCFTC, the focal
More informationABS Shelf Eligibility Criteria
SEC Re-proposes Shelf Eligibility Criteria for Asset-Backed Securities SUMMARY On July 26, 2011, the Securities and Exchange Commission re-proposed eligibility criteria for shelf registration of asset-backed
More informationRecent CFTC Issuances
CFTC Issues Proposed Rules under the Dodd-Frank Act on the Prohibition of Market Manipulation and an Advance Notice of Proposed Rulemaking on the Prohibition of Disruptive Trading Practices SUMMARY On
More informationU.S. House of Representatives Passes Comprehensive OTC Derivatives Legislation
U.S. House of Representatives Passes Comprehensive OTC Derivatives Legislation House of Representatives Passes in H.R. 4173, the Wall Street Reform and Consumer Protection Act of 2009, Which Includes Compromise
More informationCFTC Hearings on Energy Markets
Hearings Focused on Current Application of Position Limits and Hedge Exemptions but CFTC Did Not Take Further Action SUMMARY The Commodity Futures Trading Commission (CFTC) recently concluded a series
More informationProposed Roadmap For IFRS Adoption
SEC Proposes a Roadmap that Could Lead to Mandatory Use of IFRS by U.S. Issuers Beginning in 2014-2016; Also Proposes Rules Permitting Early Use of IFRS by Certain U.S. Issuers SUMMARY The SEC has published
More informationProposed Legislation Affecting Energy Trading
Proposed Legislation Affecting Energy Trading Proposed Legislation Responding to the Substantial Increase in the Price of Energy Commodities SUMMARY As a result of recent substantial increases in the price
More informationSEC Approves New PCAOB Auditing Standard Relating to Communications Between Auditors and Audit Committees
January 2, 2013 SEC Approves New PCAOB Auditing Standard Relating to Communications Between Auditors and The U.S. Securities and Exchange Commission has approved Auditing Standard No. 16, Communications
More informationCFTC Proposed Rule on Energy Markets Position Limits and Hedge Exemptions
CFTC Proposed Rule on Energy Markets Position Limits and Hedge Exemptions CFTC Adopts Proposed Rule During Public Meeting to Impose Speculative Position Limits on Energy Commodities and to Limit Hedge
More informationFederal Banking Agencies Release New Guidance on the Treatment of Foreign Excluded Funds Under the Volcker Rule
Federal Banking Agencies Release New Guidance on the Treatment of Foreign Excluded Funds Under the SUMMARY On Friday afternoon, the staffs of the Board of Governors of the Federal Reserve System (the Federal
More informationMost of the provisions described below will be effective for tax years beginning after 2017.
Insurance Company Provisions SUMMARY On December 20, Congress voted to pass a comprehensive tax reform bill (the Act ), 1 and today, the President signed the Act into law. The Act represents the most significant
More informationFATCA: Updates and Coordinating Regulations
FATCA: Updates and Coordinating Regulations Treasury Releases Last Substantial Regulations Package Necessary to Implement FATCA SUMMARY On February 20, 2014, the IRS and the Treasury Department issued
More informationInternal Revenue Service Directive to Examiners on Equity Swaps
Internal Revenue Service Directive to Examiners on Equity Swaps The Internal Revenue Service Outlines its Approach for Examining Equity Swaps That May Have Been Executed to Avoid U.S. Withholding Tax SUMMARY
More informationCorporate Expatriation Transactions
IRS and Treasury Issue Final Regulations on the Substantial Business Activities Exception to Section 7874 SUMMARY On June 3, 2015, the IRS and Treasury Department released final regulations (the Regulations
More informationCFTC Chairman Releases White Paper on Cross-Border Swaps Regulation Version 2.0
CFTC Chairman Releases White Paper on Cross-Border Swaps Regulation Version 2.0 White Paper Proposes New Approach to Providing Exemptions and Other Relief from CFTC s Dodd-Frank Swaps Rules for Certain
More informationBank Capital Plans and Stress Tests
FDIC and OCC Propose Amendments to Their Stress Testing Rules SUMMARY On December 18, the FDIC and the OCC issued proposed rules that would amend their respective stress testing rules that implement the
More informationCFTC v. Wilson: Court Rules against CFTC in Commodities Manipulation Bench Trial
CFTC v. Wilson: Court Rules against CFTC in Commodities Manipulation Bench Trial Court Holds that Open-Market Bids and Offers Made with an Honest Desire to Trade Cannot Support Liability under the Commodity
More informationCourt Dismisses Challenge to CFTC Cross- Border Guidance
Court Dismisses Challenge to CFTC Cross- Border Guidance District Court Dismisses Broad-Based Challenge to CFTC Cross- Border Interpretative Guidance but Remands Several Title VII Dodd- Frank Swaps Rules
More informationRecovery Planning Guidelines for Certain Large Banks
Recovery Planning Guidelines for Certain Large Banks Proposed OCC Guidelines Would Require Recovery Planning for Large National Banks, Insured Federal Savings Associations and Insured Federal Branches
More informationNew Disclosure Requirement for Derivatives Over Basket Positions That Are Controlled by the Counterparty
July 9, 2015 New Disclosure Requirement for Derivatives Over Basket Positions That Are Controlled by the Counterparty Financial Institutions and Counterparties Must Retroactively Disclose Participation
More informationIRS Releases Initial Guidance on the 2017 Amendments to the Internal Revenue Code s Limitation on Deduction for Certain Executive Compensation
IRS Releases Initial Guidance on the 2017 Amendments to the Internal Revenue Code s Limitation on Deduction for Certain Executive Compensation Notice 2018-68 Provides Guidance on the Application of the
More informationReporting Requirements for Foreign Financial Accounts Including Foreign Hedge Funds and Private Equity Funds
Reporting Requirements for Foreign Financial Accounts Including Foreign Hedge Funds and Private IRS Releases Guidance Allowing Taxpayers Recently Learning of Filing Obligations Until September 23, 2009
More informationSEC Finalizes Guidance to Stock Exchanges on Compensation Committee and Adviser Independence
SEC Finalizes Guidance to Stock Exchanges on Compensation Committee and Adviser Independence Exchanges Still Responsible for Key Details, Including Definition of Independence, and Have 90 Days to Propose
More informationRegulated Investment Companies
IRS Extends Guidance on Stock Distributions to Publicly-Traded SUMMARY On January 7, 2009, the Internal Revenue Service issued Revenue Procedure 2009-15 which extends to publicly-traded regulated investment
More informationCompensation and Corporate Governance Disclosure and Proxy Solicitation
Compensation and Corporate Governance Disclosure and Proxy Solicitation SEC Publishes Proposed Rules to Expand Disclosure Regarding Compensation and Corporate Governance Matters and to Clarify Proxy Solicitation
More informationIRS Finalizes Regulations Relating to Allocations of Partnership Items Involving Partners That Are Look-Through Entities
IRS Finalizes Regulations Relating to Allocations of Partnership Items Involving Partners That Are Look-Through Entities SUMMARY On May 19, 2008, the Internal Revenue Service issued final regulations on
More informationSEC Guidance on Reporting for U.S. Tax Reform
SEC Guidance on Reporting for U.S. Tax Reform SEC Staff Releases Guidance on Form 8-K Reporting for the Re-Measurement of Deferred Tax Assets and on Initial Income Tax Effects of New Tax Legislation SUMMARY
More informationIRS Replaces Proposed Regulations on Disguised Sale Rules and Allocation of Partnership Liabilities
IRS Replaces Proposed Regulations on Disguised Sale Rules and Allocation of Partnership Liabilities The Proposed Regulations, if Adopted, Would Reverse Prior Temporary and Proposed Regulations, but Bottom-Dollar
More informationSEC Work Plan for Consideration of IFRS Adoption
SEC Work Plan for Consideration of IFRS Adoption SEC Publishes a Work Plan to Study Potential Adoption of IFRS for U.S. Issuers; Potential Transition to IFRS Delayed Until 2015-2016 SUMMARY The SEC has
More informationNYSE Corporate Governance Standards
SEC Publishes Proposed Changes to Update and Clarify NYSE Corporate Governance Standards SUMMARY The SEC has published for public comment proposed changes to the New York Stock Exchange corporate governance
More informationConcentration Limits on Large Financial Companies
Federal Reserve Approves Final Rule Implementing Dodd-Frank s Financial Sector Concentration Limit SUMMARY Last week, the Board of Governors of the Federal Reserve System (the Federal Reserve ) approved
More informationAuction Rate Preferred Stock
IRS Provides Guidance on Effect of Liquidity Facilities on Equity Character of Issued by Closed-End Regulated Investment Companies SUMMARY On June 13, 2008, the IRS issued Notice 2008-55, providing guidance
More informationReal Estate Investment Trusts
IRS Issues Temporary Guidance on Stock Distributions by Real Estate Investment Trusts SUMMARY On, the Internal Revenue Service issued Revenue Procedure 2008-68 which provides, on a temporary basis, that
More informationCOBRADesk Same Day Clearance
FINRA Announces Optional Procedure for Same Day Clearance of Shelf Filings under Rule 5110 SUMMARY The FINRA Corporate Financing Department has created a Same Day Clearance Option that allows issuers and
More informationOCC Lending Limit Rules
OCC Issues Interim Final Rules Applying the Lending Limit for National Banks and Savings Associations to the Credit Exposure to Derivatives and Securities Financing Transactions SUMMARY On June 20, the
More informationDepositary Receipts Program Payments
IRS Releases Chief Counsel Memorandum Applying Withholding Tax to Payments Made to a Non-U.S. Corporate Issuer Participating in a Sponsored American Depositary Receipts Program SUMMARY On December 17,
More informationMoney Market Mutual Funds
Financial Stability Oversight Council Proposes Recommendations for Money Market Mutual Fund Regulation SUMMARY On November 19, 2012, the Financial Stability Oversight Council (the FSOC ) published for
More informationCorporate Reorganizations
IRS Finalizes Regulations on the Extent To Which Creditors of a Corporation Will Be Treated as Proprietors in Determining Whether Continuity of Interest Is Preserved in a Potential Reorganization SUMMARY
More informationMoney Market Fund Regulation
SEC Proposes Rule Amendments That Bring Money Market Funds Under Increased Regulation SUMMARY Money market funds depend on rule 2a-7 to value their assets in order to maintain a stable net asset value,
More informationSEC Approves New PCAOB Auditor Reporting Standard
SEC Approves New PCAOB Auditor Reporting Standard New Standard Expands the Scope of the Auditor s Report and Requires Auditors to Identify and Discuss Critical Audit Matters SUMMARY On October 23, 2017,
More informationEmergency SEC Orders Concerning Short Sales
Emergency SEC Orders Concerning Short Sales SEC Takes Temporary Action to Prohibit Most Short Sales in Publicly Traded Shares of Certain Financial Firms and to Require Certain Institutional Investment
More informationTax Reform Bill Proposes Significant Compensation Changes
Tax Reform Bill Proposes Significant Compensation Changes Tax Reform Proposal Would Eliminate Nonqualified Deferred Compensation, Limit Deductions for Payments to Highly Compensated Officers and Restrict
More informationVolcker Rule. Agencies Release Limited Volcker Rule Guidance. June 10, 2014
June 10, 2014 Volcker Rule Agencies Release Limited Volcker Rule Guidance This afternoon, the Board of Governors of the Federal Reserve System (the Federal Reserve ), the Office of the Comptroller of the
More informationProposed Regulations Would Greatly Expand Reach of ERISA Fiduciary Exposure
Proposed Regulations Would Greatly Expand Reach of ERISA Fiduciary Exposure Adoption Would Extend ERISA s Prudence and Conflict of Interest Rules to Those Providing Investment Advice to Employee Benefit
More informationCFTC and SEC Issue Final Swap-Related Rules Under Title VII of Dodd-Frank
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,
More informationTax Election to Treat Disposition of Stock of a Subsidiary as a Sale of Its Assets
Tax Election to Treat Disposition of Stock of a Subsidiary as a Sale of Its Assets Proposed Regulations Would Allow a Corporation to Treat Certain Dispositions of Stock of a Subsidiary as a Sale of Its
More informationMoney Market Fund Regulation
SEC Approves Rule Amendments Affecting Money Market Funds SUMMARY The Securities and Exchange Commission has adopted various amendments to rule 2a-7 and other rules relating to money market funds under
More informationClient Alert. CFTC and SEC Issue Final Rule Defining Certain Swap Products and Triggering Several Dodd-Frank Obligations Relating to Swaps.
Number 1396 September 19, 2012 Client Alert Latham & Watkins Corporate Department CFTC and SEC Issue Final Rule Defining Certain Swap Products and Triggering Several Dodd-Frank Obligations Relating to
More informationSEC Approves NYSE Proposal to Facilitate Listings of Companies Without a Trading History
SEC Approves NYSE Proposal to Facilitate Listings of Companies Without a Trading History SUMMARY On February 2, 2018, the SEC issued an order approving, on an accelerated basis, a proposed rule filed by
More informationFINRA Corporate Financing
FINRA Solicits Comments on Proposed Amendments to the Corporate Financing Rule (Underwriting Terms and Arrangements) SUMMARY FINRA is soliciting comments on proposed amendments to FINRA Rule 5110 the Corporate
More informationNew York Department of Financial Services Addresses Use of External Consumer Data. and Information Sources in Underwriting for Life Insurance
New York Department of Financial Services Addresses Use of External Consumer Data and Information Sources in Underwriting for Life Insurance NYDFS Issues Circular Letter on the Use of External Consumer
More informationReporting Requirements for Foreign Financial Accounts
Reporting Requirements for Foreign Financial Accounts Final FinCEN Regulations on Foreign Bank and Financial Account Reporting SUMMARY On February 23, 2011, the Financial Crimes Enforcement Network of
More informationAmendments to the UK Bank Levy Regime and its Interaction with French and German Bank Levies
Amendments to the Regime and its Interaction with French and German Bank Levies SUMMARY In the UK Budget of June 2010, the Chancellor of the Exchequer announced a tax based on banks balance sheets, known
More informationNasdaq Compensation Committee Independence Requirements
Nasdaq Compensation Committee Independence Requirements SEC Publishes Nasdaq Rule Change Removing Prohibition on Receipt of Compensatory Fees by Compensation Committee Members; Change Aligns Nasdaq Rule
More informationAmendments to the New York Non-Profit Revitalization Act
Amendments to the New York Non-Profit Revitalization Act SUMMARY On November 28, 2016, Governor Cuomo signed into law Assembly Bill A10365B (the Amendment ), which amended the New York Not-for-Profit Corporation
More informationRegistered Offerings of Debt Securities
SEC Proposes Amendments to Simplify and Streamline Financial Disclosures About Issuers and Guarantors of Guaranteed Securities and Affiliates Whose Securities Collateralize Registered Securities SUMMARY
More informationHouse and Senate Pass NOL Carryback Legislation
House and Senate Pass NOL Carryback Legislation Revenue Provisions of the Worker, Homeownership, and Business Assistance Act of 2009 Include Five-Year Carryback of Net Operating Losses, an Extension and
More informationTax Reform and State and Local Taxation
Initial New York State Reactions SUMMARY Pursuant to the federal tax reform enacted in December 2017, 1 individuals are significantly limited in their ability to deduct state and local taxes. 2 As a result,
More informationCommercial Mortgage Modifications
IRS Issues Guidance Permitting Certain Liens Securing Loans Held in Real Estate Mortgage Investment Conduits to Be Released SUMMARY On August 17, 2010, the Internal Revenue Service (the IRS ) issued Revenue
More informationIRS Issues Proposed Regulations on Qualified Opportunity Funds
IRS Issues Proposed Regulations on Qualified Opportunity Funds Proposed Regulations Would Clarify a Number of Threshold Issues But Also Leave Many Other Issues to be Resolved by Future Guidance SUMMARY
More informationRecent Developments in New York State Tax Law Including Tax Provisions in the Recently Enacted Budget
Recent Developments in Law Including Tax Provisions in the Recently Enacted Budget SUMMARY On March 30, 2018, the New York State ( New York or State ) legislature passed the State Budget for Fiscal Year
More informationSecurity-Based Swaps: Capital, Margin and Segregation Requirements
Security-Based Swaps: Capital, Margin and Segregation Requirements SEC Proposes Rules Regarding Capital, Margin and Collateral Segregation Requirements for Security-Based Swap Dealers and Major Security-Based
More informationNew York State Budget
2009-2010 Budget Bill Makes Important Changes to NYS Tax Laws SUMMARY The 2009-2010 New York State Budget Bill which was recently signed into law makes a number of changes to the New York State ( NYS )
More informationFinal Stock Exchange Rules for Compensation Committees and Advisers
Final Stock Exchange Rules for Compensation Committees and Advisers SEC Approves NYSE and Nasdaq Revised Listing Standards; Board Action Required by July 1, 2013 with Regard to Compensation Committee Authority
More informationSEC Staff Begins Taking Steps to Reform Shareholder Proposals
SEC Staff Begins Taking Steps to Reform Shareholder Proposals Guidance Contemplates New Board of Director Involvement in the Ordinary Business and Economic Relevance Exclusions and Suggests the Staff Would
More informationCFTC Re-Proposes Rules on Position Limits on Physical Commodity Derivatives
CFTC Re-Proposes Rules on Position Limits on Physical Commodity Derivatives CFTC Publishes New Proposed Rules That Would Impose Position Limits on Futures and Economically Equivalent Swaps on 25 Energy,
More informationNYSE Notice Procedures
NYSE Proposes to Require Electronic Submission of Notices to NYSE Through Web-Based Communication System SUMMARY The SEC has published for public comment proposed changes to the New York Stock Exchange
More informationAgencies Promulgate Final Regulations on Internet Gambling
Agencies Promulgate Final Regulations on SUMMARY On November 12, 2008, the U.S. Treasury Department and the Federal Reserve Board jointly promulgated final regulations implementing certain provisions of
More informationNew York State Paid Family Leave
Effective January 1, 2018, Employers Must Provide Most Employees up to Eight Weeks of Family Leave with Pay Equal to 50% of the Employee s Average Weekly Wage as Limited by a Statutory Cap SUMMARY Effective
More informationJudicial Deference to the IRS
Supreme Court Holds that Chevron Deference Applies to Interpretive Treasury Regulations SUMMARY On January 11, 2011, the U.S. Supreme Court held, in Mayo Foundation for Medical Education and Research v.
More informationFederal Reserve Supervision
Federal Reserve Updates Consolidated Supervision Framework for Large Financial Institutions SUMMARY On December 17, 2012, the staff of the Federal Reserve issued a Supervision and Regulation ( SR ) letter
More informationForeign Private Issuer Exemption from SEC Registration
SEC Proposes to Amend the Rule 12g3-2(b) Exemption SUMMARY On February 25, 2008, the Securities and Exchange Commission published proposed amendments to Rule 12g3-2(b), which provides an exemption from
More informationSpin-Off and Listing by Introduction of Feishang Anthracite Resources Limited
Spin-Off and Listing by Introduction of Feishang Anthracite Resources Limited Spin-Off by U.S.-Listed Companies via a Listing by Introduction on the Hong Kong Stock Exchange 1 SUMMARY China Natural Resources,
More informationPresident Obama s Fiscal Year 2012 Revenue Proposals
President Obama s Fiscal Year 2012 Revenue Proposals Proposals Relating to International Taxation SUMMARY On February 14, 2011, the Obama Administration (the Administration ) released the General Explanations
More informationPresident Obama s Fiscal Year 2012 Revenue Proposals
President Obama s Fiscal Year 2012 Revenue Proposals Proposals Relating to Individuals and Estate and Gift Taxation SUMMARY On February 14, 2011, the Obama Administration (the Administration ) released
More informationFinal Regulations Ease Compliance with the Loss Trafficking Rules
Final Regulations Ease Compliance with the Loss Trafficking Rules IRS Finalizes Regulations Limiting the Application of the Section 382 Segregation Rules in Certain Circumstances SUMMARY Under Section
More information