The Dood-Frank Act

Kolobara Law Firm offers a comprehensive approach to the Dodd-Frank Act training, implementation, and compliance for commodities and derivatives market participants. We stay on the cutting edge of the latest regulatory and legal developments related to the Dodd-Frank Act. Our managing attorney, Miki Kolobara, serves on one of the largest Dodd-Frank working groups in the energy industry – the IECA Contracts and Legal Group. He has been a frequent speaker on the Dodd-Frank Act implementation and compliance.

Kolobara Law Firm develops customized Dodd-Frank Act compliance and implementation programs for end users, swap dealers, and major swap participants. We help market participants identify the relevant Dodd-Frank Act exposures and we assist them in creating commercially oriented solutions with minimal business disruption.

Kolobara Law Firm provides its clients with continuous updates of the latest regulatory and legal developments under the Dodd-Frank Act, especially those relevant to energy trading market participants. We also support our clients with training and compliance implementation programs for front, middle, and back offices consistent with the best industry practices. To that end, Kolobara Law Firm provides practical steps for identifying and managing various risk aspects of the Dodd-Frank Act, and assists in creating a robust compliance program to demonstrate a culture of compliance consistent with the Dodd-Frank Act requirements.

The following are some of the Dodd-Frank Act challenges and exposures that we can assist with, whether our clients are deemed to be end users, major swap participants, or swap dealers:

Identifying and Evaluating Key Provisions for Energy Trading Markets:
• Providing up-to-date definitions of key terms for energy trading including, but not limited to swap, commercial risk, bona fide hedge, end user, major swap participant, swap dealer, eligible contract participant, swap execution facility, position limits, market manipulation prohibition, real-time reporting, derivatives clearing organizations, swap data repository, and many more.
• Distinguishing between the “end user” and “major swap participant” designations, and understanding the unintended consequences and hidden risks.
• Evaluating whether a particular transaction is a bona fide hedge, as defined by CFTC.
• Analyzing the cost/benefit aspects of mandatory clearing for swaps.
• Examining the market manipulation rule and its effect on physical and financial trading.
• Reviewing and analyzing the treatment of “Special Entities” under the Dodd-Frank Act.
• Examining business conduct standards under the Dodd-Frank Act.

Practical Steps for Identifying and Managing Regulatory Risk:
• Performing an enterprise-wide review of all trading activities and effectively evaluating and implementing an energy trading surveillance program consistent with the best industry practices.
• Identifying and implementing risk management requirements as required by the CFTC.
• Establishing and maintaining effective compliance training for the front, middle and back offices.
• Reviewing and modifying trading and hedging strategies to meet the new regulatory requirements.

Reviewing and Amending Standard Trading and Credit Documentation in order to Ensure Adequate Compliance:
• Identifying the best industry practices for creating and implementing energy trading and risk management policies and procedures.
• Examining the relevant provisions of the ISDA master agreement.
• Assessing the Dodd-Frank Act’s implications on credit, collateral, and margin documentation, especially in light of credit rating agencies’ potential liability.
• Reviewing the impact the Act will have on physically settled master agreements such as NAESB, EEI, and WSPP.
• Considering the impact of the mandatory clearing requirement on energy trading documentation.

Practical Considerations for the Dodd-Frank Act Implementation and Compliance:
• Outlining what every front office and middle office manager needs to do now to implement Dodd-Frank Act.
• Charting the key steps required to ensure that all traders and originators are familiar, and stay compliant with the products and markets they trade, including applicable exchange rules and protocols.
• Identifying the key steps in mandatory swap reporting.
• Explaining what every Risk Oversight Committee needs to know and do to implement Dodd-Frank Act.
• Ensuring that there is sufficient emphasis on creating and maintaining a culture of compliance both internally and externally.
• Determining if there is clear and consistent enforcement, including appropriate sanctions for violating policies and procedures.
• Clarifying the differences between trading and clearing.
• Monitoring registration and regulation of major swap participants and swap dealers.
• Identifying, quantifying, and managing operational and financial risk to utilities and load serving entities from Dodd-Frank Act.
Energy Trading Law
Transactions Energy Trading Law Risk Management Energy Trading Law Compliance