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CFTC Sets Rules for Foreign Transactions Impacting U.S. Market

The Commodity Futures Trading Commission (CFTC) Friday approved for public comment proposed interpretive guidance regarding the cross-border application of the swaps provisions of portions of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) and the Commission's regulations.

The proposed guidance interprets Section 2(i) of the Commodity Exchange Act (CEA), which states that the swaps provisions of the CEA shall not apply to activities outside the United States unless those activities have a direct and significant connection with activities in, or effect on, commerce of the United States.

All five commissioners voted to approve the guidance, which will be open for public comment for 45 days. Under the proposed guidance, the Commission:

The proposed guidance defines a "non-U.S. person," sets thresholds for the size of transactions that would be affected and defines a procedure to determine when compliance with a foreign government's rules would be accepted in place of CFTC regulations.

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