Background to the Dodd-Frank Act

Following the financial crisis of the US capital markets in 2008, the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank) was enacted to increase the regulation of the US financial system. With respect to financial derivatives, Dodd-Frank:

1. •

   mandates the registration and regulation of 'swap dealers' and 'major swap participants' (both terms are discussed in further detail below)

2. •

   imposes clearing and trade execution requirements on standardised derivative products

3. •

   requires recordkeeping and data reporting of swaps, including real-time public reporting, and

4. •

   enhances federal agencies’ oversight over the swaps industry

Pursuant to Dodd-Frank, the US Commodity Futures Trading Commission (CFTC), which regulates the futures and option markets, and the US Securities and Exchange Commission (SEC) jointly regulate the derivatives markets. The CFTC regulates 'swaps' under the Commodity Exchange Act (CEA), and the SEC regulates 'security-based swaps' under the Securities Exchange Act of 1934, as amended (the Exchange Act). The CFTC and the SEC jointly share jurisdiction over 'mixed swaps', as defined in Section 721