The CFTC met this morning and just adopted final rules and interpretations (as part of a joint rulemaking with the SEC which has not yet acted, but will, on these proposals) further defining “swap,” “security-based swap,” and “security-based swap agreement” as a part of its Dodd-Frank Act rulemaking responsibilities. These new rules and interpretations, which will not become effective until 60 days after subsequent publication in the Federal Register, cover roughly 600 pages of text.
NAFA has been concerned primarily with one important aspect of the initial proposals—whether the rules would sweep in annuities and various other insurance products and subject such products to various onerous and unworkable requirements under the Act and regulations.
NAFA drafted and filed comments, with CapCity’s assistance, earlier during the rulemaking process strongly urging that fixed annuity products be excluded from any relevant proposed definitions.
The key point of today’s action from NAFA’s perspective is that as adopted “annuities,” including fixed annuities, are specifically excluded from these definitions and thus are NOT subject to the various requirements. The rules provide that the exclusion of annuities and other insurance products is deemed to be a non-exclusive safe harbor, meaning that even if a transaction did not meet the enumerated product requirements it still might be excluded on a case by case basis depending on the facts and circumstances involved. (Grandfathering also is provided for certain existing transactions that would not otherwise qualify for such an exclusion.)