Last Friday, July 6, 2012, the Securities and Exchange Commission (SEC) adopted final rules further defining the terms “swap” and “security-based swap” (SB swap). The Commodity Futures Trading Commission (CFTC) plans to adopt these same definitional rules tomorrow at a public meeting. The publication of the swap definition in the Federal Register will start a countdown to compliance for many of the CFTC’s Dodd-Frank rules regulating the swap markets.

Part one of this client alert is a timeline showing estimated initial compliance dates for CFTC rules that are triggered by the publication of the final swap definition in the Federal Register. To estimate the compliance dates we have assumed that the final swap definition will be published in the Federal Register 23 days after the CFTC approves the rule — since December 2011, 23 days is the average time it has taken rules adopted by the CFTC to appear in the Federal Register. The actual timeline could be longer or shorter.

Part two of this client alert summarizes the SEC’s plan for phasing in compliance with SB swap rules. Federal Register publication of the SB swap definition will not start the clock ticking toward compliance deadlines for most aspects of SB swap market regulation. Instead, the SEC plans to sequence implementation of SB swap rules according to a policy statement released in June.3 This policy statement should help SB swap market participants better plan for compliance with the SEC’s new rules.