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What is the Dormant Rule? A Comprehensive Legal Overview
Definition & Meaning
A dormant rule refers to a regulation set by a registered entity that has not been put into action for a full year after receiving certification or approval from the Commodity Futures Trading Commission (CFTC). This term also applies to any rule or amendment from a designated contract market, derivatives transaction execution facility, or derivatives clearing organization that remains inactive for the same duration. Essentially, if a rule is not implemented within twelve months, it is considered dormant.
Table of content
Legal Use & context
The term "dormant rule" is primarily used in the context of financial regulations, specifically within the commodities and securities exchanges. It is relevant to entities that are registered with the CFTC, which oversees the trading of derivatives and futures. Understanding dormant rules is crucial for compliance, as these rules can impact market operations and regulatory oversight. Users may find it beneficial to utilize legal templates provided by US Legal Forms to assist in navigating related compliance matters.
Key legal elements
Real-world examples
Here are a couple of examples of abatement:
Example 1: A derivatives clearing organization introduces a new rule regarding margin requirements. If this rule is not implemented within twelve months of CFTC approval, it becomes a dormant rule.
Example 2: A designated contract market proposes an amendment to its trading rules. If the amendment is not enacted within a year of certification, it is classified as dormant. (hypothetical example)
Comparison with related terms
Term
Definition
Difference
Dormant Rule
A rule not implemented within twelve months of approval.
Specifically pertains to rules of registered entities.
Inactive Rule
A rule that is not currently in effect.
May not have a specific time frame for inactivity.
Proposed Rule
A rule that is suggested but not yet approved.
Still under consideration, not yet certified.
Common misunderstandings
What to do if this term applies to you
If you are involved with a registered entity and believe a rule may be dormant, it is essential to review the status of that rule. You can consult with legal professionals to understand the implications of a dormant rule on your operations. Additionally, consider using templates from US Legal Forms to ensure compliance and proper documentation.
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