KPM is a QIR and Designated Evaluation Agent for Dodd-Frank compliance in Charlotte, NC.KPM Financial has the appropriate policies and procedures in place to act as a Qualified Independent Representative (QIR) for Special Entities and a Designated Evaluation Agent for non-Special Entities.

Dodd-Frank Compliance

After the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”) was signed into law in 2010, many things changed for banks offering swaps as well as end users of swaps.  Two of the more poignant terms within Dodd-Frank are the safe harbors that banks now get by requiring end users to have either a Qualified Independent Representative (QIR) or a Designated Evaluation Agent.

Qualified Independent Representative (QIR)

Any swap dealer or major swap participant that offers to enter into a swap with a Special Entity must have a reasonable basis to believe that the Special Entity has a Qualified Independent Representative (“QIR”) that:

  • Has sufficient knowledge to evaluate the transaction and risks;
  • Is not subject to a statutory disqualification;
  • Is independent of the swap dealer or major swap participant;
  • Undertakes a duty to act in the best interests of the Special Entity it represents;
  • Makes timely and appropriate disclosures to the Special Entity;
  • Evaluates fair pricing and the appropriateness of the transaction;
  • Is subject to restrictions on political contributions in the case of a Special Entity that is a municipality or governmental plan; and
  • In the case of employee benefit plans subject to the Employee Retirement Income Security act of 1974, is a fiduciary as defined in section 3 of that Act (29 U.S.C. 1002).

The QIR will be deemed to be “independent” if:

  • The QIR is not and, within one year of representing the Special Entity in connection with the swap, was not an “associated person” of the swap dealer or major swap participant;
  • The QIR is not directly or indirectly, controlled by, in control of, or under common control with the swap dealer or major swap participant;
  • There is no principal relationship between the QIR  and the swap dealer or major swap participant;
  • The swap dealer or major swap participant did not refer, recommend, or introduce the QIR  to the Special Entity within one year of the QIR’s representation of the Special Entity in connection with the swap;
  • The QIR discloses to the Special Entity all material conflicts of interest that could reasonably affect its judgment; and
  • Complies with policies and procedures reasonably designed to manage and mitigate such material conflicts of interest.

Designated Evaluation Agent

For non-Special Entities most swap dealers and major swap participants will require end users to represent that they have:

  • Written policies and procedures that are reasonably designed to ensure that the person responsible for evaluation such recommendation and making trading decisions on behalf of the end user are capable of doing so; or
  • One or more third party agents that is responsible for (i) evaluating investment risks with regard to swap and trading strategies involving swaps as well as any recommendations provided to the end users and (ii) making trading decisions with respect to swap on the end user’s behalf.