Goldman Sachs 2012 Annual Report Download - page 62

Management’s Discussion and Analysis
The Dodd-Frank Act also contains provisions that include
(i) requiring the registration of all swap dealers and major
swap participants with the CFTC and of security-based
swap dealers and major security-based swap participants
with the SEC, the clearing and execution of certain swaps
and security-based swaps through central counterparties,
regulated exchanges or electronic facilities and real-time
public and regulatory reporting of trade information,
(ii) placing new business conduct standards and other
requirements on swap dealers, major swap participants,
security-based swap dealers and major security-based swap
participants, covering their relationships with
counterparties, their internal oversight and compliance
structures, conflict of interest rules, internal information
barriers, general and trade-specific record-keeping and risk
management, (iii) establishing mandatory margin
requirements for trades that are not cleared through a
central counterparty, (iv) position limits that cap exposure
to derivatives on certain physical commodities and
(v) entity-level capital requirements for swap dealers, major
swap participants, security-based swap dealers and major
security-based swap participants.
The CFTC is responsible for issuing rules relating to swaps,
swap dealers and major swap participants, and the SEC is
responsible for issuing rules relating to security-based
swaps, security-based swap dealers and major
security-based swap participants. Although the CFTC has
not yet finalized its capital regulations, certain of the
requirements, including registration of swap dealers and
real-time public trade reporting, have taken effect already
under CFTC rules, and the SEC and the CFTC have
finalized the definitions of a number of key terms. The
CFTC has finalized a number of other implementing rules
and laid out a series of implementation deadlines in 2013,
covering rules for business conduct standards for swap
dealers and clearing requirements.
The SEC has proposed rules to impose margin, capital and
segregation requirements for security-based swap dealers
and major security-based swap participants. The SEC has
also proposed rules relating to registration of security-based
swap dealers and major security-based swap participants,
trade reporting and real-time reporting, and business
conduct requirements for security-based swap dealers and
major security-based swap participants.
We have registered certain subsidiaries as “swap dealers”
under the CFTC rules, including Goldman, Sachs & Co.
(GS&Co.), GS Bank USA, Goldman Sachs International
(GSI) and J. Aron & Company. We expect that these
entities, and our businesses more broadly, will be subject to
significant and developing regulation and regulatory
oversight in connection with swap-related activities. Similar
regulations have been proposed or adopted in jurisdictions
outside the United States and, in July 2012 and February
2013, the Basel Committee and the International
Organization of Securities Commissions released
consultative documents proposing margin requirements for
non-centrally-cleared derivatives. The full impact of the
various U.S. and non-U.S. regulatory developments in this
area will not be known with certainty until the rules are
implemented and market practices and structures develop
under the final rules.
The Dodd-Frank Act also establishes the Consumer
Financial Protection Bureau, which has broad authority to
regulate providers of credit, payment and other consumer
financial products and services, and has oversight over
certain of our products and services.
See Note 20 to the consolidated financial statements for
additional information about regulatory developments as
they relate to our regulatory capital ratios.
See “Business — Regulation” in Part I, Item 1 of our
Annual Report on Form 10-K for more information on the
laws, rules and regulations and proposed laws, rules and
regulations that apply to us and our operations.
60 Goldman Sachs 2012 Annual Report