The Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC) adopted highly anticipated final rules yesterday to further define the terms “swap dealer,” “security-based swap dealer,” “major swap participant,” “major security-based swap participant” and “eligible contract participant” (Final Entity Rules). The Final Entity Rules are significant because entities that meet one of the aforementioned dealer or major participant definitions will be required to register with the CFTC or SEC and comply with a myriad of substantive regulatory requirements. The Final Entity Rules are considered a key component of the new regulatory regime that the Dodd-Frank Wall Street Reform and Consumer Protection Act (the Dodd-Frank Act) imposes on over-the-counter derivatives. In addition, the CFTC adopted a final rule that will subject commodity options, other than those that are physically settled, to the same regulatory regime as other types of swaps (Commodity Options Rule).

The Final Entity Rules and the Commodity Options Rule are not yet publicly available but both will be published in the Federal Register in the coming days. The following discussion is based on statements made by CFTC Commissioners and staff at an open meeting that was held yesterday and on CFTC fact sheets and Q&As that are available on the CFTC’s website.