3/21/14

Client Alert: Dodd Frank Compliance Date for Notification of Segregation on Horizon for Swap Dealers and Major Swap Participants

Related Practices

Attorneys & Professionals

In November of 2013, the U.S. Commodity Futures Trading Commission (CFTC) issued Final Rules on the Protection of Collateral of Counterparties to Uncleared Swaps (the Final Rules).  The Final Rules generally provide:

The right to segregation or notice of segregation does not apply to variation margin (VM) under the Final Rules.  However, the Final Rules do not restrict parties from negotiating segregation arrangements for VM.

The Final Rules became effective on January 6, 2014.  For uncleared transactions that are entered after January 6, 2014 into with “new counterparties”, the SD or MSP must be in compliance with the Final Rules by May 5, 2014.  For uncleared transactions that are entered into after January 6, 2014 with “existing counterparties”, the SD or MSP must be in compliance with the Final Rules by November 3, 2014.

NOTIFICATION OF RIGHT TO SEGREGATION

MECHANICS AND TIMING OF NOTIFICATION OF SEGREATION

REQUIREMENTS FOR SEGREGATED MARGIN

NON-SEGREGATED MARGIN

Questions relating to this issue may be addressed to Zach Brumfield (ztbrumfield@vorys.com), Nici Workman (nnworkman@vorys.com) or Travis Wahl (tjwahl@vorys.com).