US regulatory issues—structured products and securitisation

Dodd-Frank

Following the financial crisis of the US capital markets in 2008, the Dodd-Frank Wall Street Reform and Consumer Protection Act 2010 (Dodd-Frank) was enacted to increase the regulation of the US financial system.

With respect to derivatives used in structured products, Dodd-Frank:

1. •

   mandates the registration and regulation of 'swap dealers' and 'major swap participants'

2. •

   imposes clearing and trade execution requirements on standardised derivative products

3. •

   requires recordkeeping and data reporting of swaps, including real-time public reporting, and

4. •

   enhances federal agencies’ oversight over the swaps industry

Dodd-Frank has two key aims:

1. •

   to remove the threat of a major counterparty failure from the financial system of the kind seen by the collapse of Lehman Brothers or AIG; and

2. •

   to provide regulators with data as to the size and nature of a market which is globally measured in trillions of US dollars

Dodd-Frank...