20-April-2012

Many of the Dodd-Frank Act's compliance deadlines have been pushed back from July 2012 until 2014, according to Captive Review's article, "Dodd-Frank Act Delayed until 2014." Regulators indicated they were unlikely to finalize key aspects of the 'Volcker' rule by the deadline.

"There are many uncertainties arising out of the legislative language of the Dodd-Frank law, and the confirmation of a longer phase-in period for the Volcker rule should allow U.S. regulators to achieve a more informed definition of the necessary standards," said Frank Swain, principal on the insurance and financial services team at FaegreBD Consulting.

"At the very least, these actions will likely reduce some of the political pressure on the Congress to enact various adjustments, changes and delays in Dodd-Frank," Swain told Captive Review. "Given that Congress is divided with Republicans generally critical of Dodd-Frank controlling the House and Democrats generally supportive of Dodd-Frank in charge of the Senate, it may be difficult to achieve consensus on Dodd-Frank legislative proposals in this election year."

One key uncertainty about Dodd-Frank is whether it applies to captives. The Commodities Futures Protection Commission and the SEC have raised a de minimis exemption level for being considered a "swaps dealer" from $100 million to $8 billion. Those trading under these levels will avoid various new registration, margin and capital rules, Swain said.

"This is particularly relevant to firms that hedge energy or commodity positions," Swain added. "I am not sure of its relevance to most captives."