IRS issues new instructions on providing partners with Schedules K-1 in exclusively electronic form

New instructions from the IRS—effective February 13, 2012—detail the procedure that partnerships must undertake when furnishing partners with Schedules K-1 in an electronic format. 

ISDA March 2012 Supplement and Protocol

ISDA has announced the launch of the 2012 US Municipal Reference Entity CDS Protocol.  The purpose of the Protocol is to make similar changes to US Municipal CDS transactions (“Muni CDS”) as were made to corporate and sovereign CDS by the 2009 ISDA Credit Derivatives Determinations Committees and Auction Settlement CDS Protocol. The Protocol is open for adherence and closes at 5pm New York time on Monday April 2, 2012.

SEC Amends Rules on Advisory Performance Fee Charges

On February 15, 2012, the U.S. Securities and Exchange Commission adopted amendments to Rule 205-3 of the Investment Advisers Act of 1940 consisting of: (i) changes to the dollar amount thresholds which determine whether an individual or company is a “qualified client;” (ii) changes to the net worth test in the definition of “qualified client;” (iii) inclusion of two transition, or “grandfather,” provisions which permit investment advisers and clients to continue operating under advisory contracts entered into before adoption of these amendments.

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

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. 

Dodd-Frank 30 Day Countdown: Day 1

Japan’s Financial Instruments and Exchange Law (FIEL)

Japan’s corollary to Title VII of Dodd-Frank is the Financial Instruments and Exchange Law (FIEL), which went into effect in 2008.  While the laws are similar, they are by no means identical. The Japanese law remains silent on topics that Dodd-Frank addresses thoroughly. Most notable among these topics are provisions regarding derivative clearing organizations (DCO’s) and clearing counterparties (CCP’s). Whereas Dodd-Frank provides a framework for how DCO’s and CCP’s must be organized, maintained, funded, and accounted for, FIEL does not give any specific guidance on CCP business continuity, outsourcing, or price transparency. Dodd-Frank imposes across-the-board capital requirements intended to minimize risk in the event of a major default and ensure the business’ functionality for at least a year. In contrast, FIEL’s minimum capital requirement for CCP’s is on a case-by-case basis. Dodd-Frank also implements collateral requirements with the purpose of reducing risk to non-defaulting members in the event that a major member becomes insolvent or defaults.

Dodd-Frank 30 Day Countdown: Day 2

Swaps Experts Say Market Will Grow; Others Differ in Opinion

As the swaps market braces for Dodd-Frank impact, firms and investors differ on the anticipated changes in the newly regulated market.

Citigroup, Inc. recently released a white paper predicting that interest rate and credit default swaps will grow more than 10% by 2013 as trading risk will decrease and price transparency will increase under Dodd-Frank. Citigroup also stated that Clearinghouse increased requirements for margin will likely cause market participants to avoid marginally profitable investments. They estimate that 60% of OTC derivatives market by volume will soon be centrally cleared.

Dodd-Frank 30 Day Countdown: Day 3

ISDA Calls for Coordination Amongst Global Regulators

The International Swaps and Derivatives Association (ISDA) recently announced their position that Global regulators need to first coordinate new rules for trade repositories before drafting more complex derivatives rules. The ISDA feels that G20 agreed upon reforms must be enacted prior to other rules so that there is consistency amongst market participants.

http://www.gfsnews.com/article/2373/1/Isda_wants_US_slowdown_on_swap_rules

Dodd-Frank 30 Day Countdown: Day 4

CFTC Increases Policing Power under Dodd-Frank

The Commodity Futures Trading Commission (CFTC) has finalized a set of five “anti-manipulation” rules with respect to Title VII of Dodd-Frank requirements. 

The CFTC voted unanimously to expand the government’s ability to police potential fraud and insider trading with respect to derivatives. The CFTC established that a regulator need only show that a trader acted recklessly, as opposed to the previous standard of proving that the trader intentionally manipulated the market and created artificial prices. Scott O’Malia, CFTC Commissioner, stated that this anti-manipulation rule may confuse market participants until the agency is able to clarify how it will be used.   It still remains to be seen how the CFTC will prosecute these instances of fraud and manipulation, but CFTC Chairman Gensler said this rule, “closes a significant gap as it will broaden the types of cases we will pursue and improve the chance of prevailing over wrongdoers.”

Dodd-Frank 30 Day Countdown: Day 5

Banks Ask for Margin Relief

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. This follows on the coattails of a letter written by seven large foreign financial firms in January who asked that their margin requirements be based on their home country regulation.

Dodd-Frank 30 Day Countdown: Day 6

NYSE sees Growth in Derivatives in June

Uncertainty reigns in the derivatives market as regulators on either side of the Atlantic debate upcoming risk managements regulations, but this has hardly slowed the growth of the industry.

http://derivative-news.fincad.com/derivatives-news/nyse-sees-growth-in-derivatives-in-june-1274/