American Gas - May 2012 - (Page 5)

industrynews PEO P L E TRENDS E VEN TS DELOITTE Energy Companies Using Derivatives Face Dodd-Frank Rules ALMOST ANY energy company using financial derivatives will face significant compliance requirements under the Dodd-Frank Act, experts from Deloitte & Touche LLP warned in a recent webcast. The Dodd-Frank Wall Street Reform and Consumer Protection Act, signed into law by President Obama in July 2010, includes provisions on clearing, position transparency and reporting for swaps and installs the U.S. Commodity Futures Trading Commission (CFTC) as a “major new energy regulator,” Deloitte & Touche director William “Bill” Hederman explained. Dodd-Frank provisions will start going into effect in 2012. “There is a general misconception in the energy industry that if ‘all we are doing is hedging,’ there are few or no compliance obligations” under Dodd-Frank, Hederman said. “There currently is no end-user exemption or classification.” Hederman added, “The bottom line for the energy market is that there is a lot of uncertainty and a lot of deadlines. Almost any energy entity using swaps will face significant compliance requirements.” He noted that “significant responsibility” is assigned by Dodd-Frank to boards of directors and senior management. One reason for the current uncer- tainty, Hederman noted, is the fact that the CFTC, which has become a “political battleground,” has yet to provide definitions for such key terms as “swap” and “swap dealer.” Hederman explained that swap dealers and swap participants will face more-stringent rules than other market participants. The basic requirements include: Reporting and recordkeeping: Retention and reporting of pre-execution, execution and post-execution transaction information, including orders, executions and oral and written communications; data must be kept for five years and be readily accessible for the first two years. Compliance with exchange rules: Adherence to reporting and recordkeeping at the exchanges where derivative activity occurs for the company and adherence to margin and collateral requirements for transactions executed on the exchange platforms. Adherence to trade practices: Enhanced anti-manipulation authority compelling stronger self-surveil- MAY 2012 AMERICAN GAS 5

Table of Contents for the Digital Edition of American Gas - May 2012

American Gas - May 2012
Contents
President’s Message
In the News
Advertisers’ Index
Ask AGA
It’s Unanimous: Pipeline Safety Is Key
The Letter of the Law …
Places to Be
Jobline
Marketplace
Facts on Gas

American Gas - May 2012