The Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Act") was enacted on July 21, 2010, bringing with it substantial uncertainty on how the derivatives activities of energy market end-users, including public and privately owned energy producers such as utilities and independent power companies, consumers of energy such as municipalities, energy traders such as utilities, power companies and their respective trading subsidiaries and affiliates, would be regulated under Title VII of the Act. Since then, the Commodity Futures Trading Commission (the "CFTC") has published over 30 proposed rules to implement the provisions of the Commodity Exchange Act (the "CEA") as amended by Title VII. These proposed rules have addressed many ambiguous provisions in Title VII. However, a substantial number of questions have yet to be addressed. In addition, a number of provisions in Title VII have been interpreted by the CFTC in a manner that gives rise to concern. This paper focuses on proposed and final rules of the CFTC regarding "swaps," as broadly defined in Title VII, and the issues on which the energy market should focus, including the anticipated regulatory burden and potential impact on how the energy market operates.
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