On June 29, 2012, the Commodity Futures Trading Commission (CFTC) released its proposed interpretive guidance, “Cross-Border Application of Certain Swaps Provisions of the Commodity Exchange Act” (the Proposed Guidance), addressing the extent to which the swaps provisions of Title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) apply to persons and entities located outside the United States. The CFTC also released a proposed exemptive order providing temporary conditional exemptions from compliance with certain of the Title VII requirements for swaps (the Proposed Order). From the date that the Proposed Guidance and the Proposed Order are published in the Federal Register, the public will have 45 days and 30 days, respectively, during which to comment.

The Proposed Guidance and Proposed Order have implications both for U.S. persons conducting swap activities through branches, agencies, subsidiaries and affiliates outside of the United States as well as for non-U.S. persons entering into swaps with U.S. persons. The Proposed Guidance outlines whether a non-U.S. person or the non-U.S. subsidiaries and affiliates of U.S. persons will be required to register as either a swap dealer or major swap participant (MSP), supplementing the CFTC’s final rulemaking and interpretive guidance on swap dealer and MSP registration approved on April 18, 2012 (the Final Entities Rulemaking). The Proposed Guidance also makes clear that having a U.S. branch does not make a non-U.S. entity a U.S. person.