SEC Issues No-action Letter to ISDA® on Swaps Accounting in Dodd-Frank Era | Practical Law

SEC Issues No-action Letter to ISDA® on Swaps Accounting in Dodd-Frank Era | Practical Law

The SEC issued a no-action letter relating to certain technicalities of the swaps clearing process and Section 716 of the Dodd-Frank Act, known as the Pushout Rule.

SEC Issues No-action Letter to ISDA® on Swaps Accounting in Dodd-Frank Era

Practical Law Legal Update 2-519-4983 (Approx. 2 pages)

SEC Issues No-action Letter to ISDA® on Swaps Accounting in Dodd-Frank Era

by PLC Finance
Published on 16 May 2012 • USA (National/Federal)
The SEC issued a no-action letter relating to certain technicalities of the swaps clearing process and Section 716 of the Dodd-Frank Act, known as the Pushout Rule.
On May 11, 2012, the SEC issued a no-action letter relating to certain technicalities of the swaps clearing process and the Pushout Rule, Section 716 of the Dodd-Frank Act, which have implications for how banks and other parties account for their swap exposure. The letter is in response to ISDA's® request for the views of the SEC Office of the Chief Accountant (OCA) regarding the accounting impact under US GAAP of a novation of a bilateral OTC derivative contract "on the same financial terms" to, among other entities:
  • A central counterparty.
  • A consolidated affiliate that is not insured by the FDIC and does not have access to Federal Reserve credit facilities.
For information on the Pushout Rule, see Practice Note, US Derivatives Regulation: Swaps Pushout Rule. For information on the derivatives clearing process, see Practice Note, Mechanics of Derivatives Clearing.
"ISDA" is a registered trademark of the International Swaps and Derivatives Association, Inc. (ISDA). ISDA is not a sponsor of Practical Law and had no part in the development of this resource.