Derivative reform included in financial reform package approved by U.S. Congress

On July 15, 2010 the U.S. Senate passed the Dodd-Frank Wall Street Reform and Consumer Protection Act aimed at strengthening the U.S. financial system.

The legislation is intended to overhaul the financial regulatory system in the U.S. by improving the supervision and regulation of federal depository institutions, and setting out obligations regarding corporate governance and executive compensation.

Of particular interest to the energy markets, the legislation provides for the regulation of certain derivatives and derivatives markets.

The legislation is expected to be signed into law by President Obama this week and, if enacted, would introduce significant direct regulation of the market for over-the-counter derivatives and the market participants that use them.

A brief summary of the legislation is provided by the House Financial Services Committee, while the New York Times' Dealbook has also provided some perspective.