The Securities andExchange Commission has provided guidance as to which of theTitle VII requirements of the Dodd-Frank Act will apply to security-based swap transactions as of July 16, the effectivedate of Title VII.

It also granted market participants temporary relief fromcompliance with certain requirements of the provision.

The new guidance makes clear that substantially all of TitleVII’s requirements applicable to security-based swaps will not gointo effect on July 16. The Commission’s action also grantstemporary relief from compliance with most of the new Exchange Actrequirements that would otherwise apply on July 16.

In addition, to enhance the legal certainty provided to marketparticipants, the Commission’s action provides temporary relieffrom Section 29(b), which generally provides that contracts made inviolation of any provision of the Exchange Act shall be void as tothe rights of any person who is in violation of the provision.

“This is the first step in a series of actions the SEC intendsto take in coming days to address effective date issues,” saidRobert Cook, Director of the SEC’s Division of Trading and Markets.“Temporarily and to the extent appropriate, our goal is to preservethe pre-Dodd-Frank Act legal framework until we complete therulemaking tasks and develop a workable implementation plan.”

The antifraud and anti-manipulation prohibitions of the federalsecurities laws will continue to apply to security-based swapsafter July 16.

Title VII is the portion of the Dodd-Frank Act that establishesa comprehensive framework for regulating over-the-counterderivatives. In particular, it authorizes the Commission toregulate “security-based swaps” while also authorizing the CFTC toregulate other swaps. The portion of Title VII referred to asSubtitle B, which addresses the new regulatory regime forsecurity-based swaps, generally will take effect on July 16 (360days after the date of the Dodd-Frank Act’s enactment).

After proposing all of the key rules under Title VII, theCommission intends to consider seeking public comment on a detailedimplementation plan that will permit a rollout of the newsecurities-based swap requirements in an efficient manner whileminimizing unnecessary disruption and costs to the markets.

Although the guidance and temporary relief are now in effect,the Commission is seeking input from the public on today’s actions.Public comments should be received by July 6, 2011.

A complete list of the Commission’s work implementingthe Dodd-Frank Act is available on the SEC website.