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
Risk Management
Compliance