SEC/CFTC and Treasury Derivatives Proposals Under Dodd-Frank

SEC/CFTC Proposal Regarding Product Definitions

On April 27, 2011, the Securities and Exchange Commission ("SEC") and the Commodity Futures Trading Commission ("CFTC") (collectively, the "Commissions") issued joint proposed rules and interpretive guidance (the "Proposed Rules") to further define and solicit public comment on the terms "swap," "security-based swap," and "security-based swap agreement." Products classified as such will be subject to the mandatory clearing and trading requirements of the Dodd-Frank Act.  Comments regarding the Proposed Rules must be received by the Commissions on or before July 22, 2011.

The Proposed Rules explicitly confirm that foreign exchange ("FX") products that are not FX forwards or swaps are included within the statutory definitions, consistent with the Treasury's view (discussed below). Such products would encompass foreign currency options (non-exchange traded) (including those on FX forwards and FX swaps), non-deliverable