CFTC Finalizes Commercial End-User Exception

Final rules relating to the commercial end-user exception to the clearing requirements of the Dodd-Frank Act clarify who can take advantage of the exception and the requirements for doing so.

Title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the Act) contains significant changes to the ways in which over-the-counter derivatives are regulated. Transactions identified as "swaps" and "security-based swaps" will be regulated under the Act, and the definitions of those terms are broad enough to encompass most over-the-counter derivatives. Most standardized swap transactions likely will be subject to central clearing and exchange-style trading requirements, and certain parties to those transactions will be subject to capital, margin, registration, reporting, recordkeeping, and business conduct requirements.