On July 12, 2013, the CFTC adopted final guidance concerning the regulation of cross-border swap transactions mandated by the Dodd-Frank Act. Under Section 2(i) of the Commodity Exchange Act, as amended by Dodd-Frank, the CFTC may apply the swaps provisions to activities outside the United States that have a direct and significant connection with activities in, or effect on, commerce of the United States, or that contravene CFTC regulations adopted for the purpose of preventing evasion of the swaps provisions. The final guidance will take effect later this year, when a related CFTC exemptive order expires.
This Alert briefly discusses the U.S. person definition adopted in the final guidance, and then addresses how that definition will bear on determining whether and how the Dodd-Frank swaps provisions will apply to transactions and relationships. In this regard, it focuses on issues that will be important to asset managers and other buy-side market participants in their relationships with swap dealers.
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This article was originally published by Bingham McCutchen LLP.