The broad financial reform bill that President Barack Obama signed into law on July 21 contains provisions that will substantially change the trading landscape for U.S. energy derivatives, according to energy lawyers and analysts.

While most of the regulatory details will have to wait for rulemakings by the Commodity Futures Trading Commission, the law passed ensures that energy traders will now face a host of issues, including capital and margin requirements, reporting and record keeping obligations and position limits, and the fact that swaps must now be exchange-traded and cleared.

The CFTC, which has been given broader powers to enforce the trading rules, has already issued a list of 30 areas of rulemaking to implement sections of the Wall Street Reform and Consumer Protection Act of 2010 that restrict derivatives trading.

CFTC Chairman Gary Gensler said some of the specific issues in the law will require only one rule, while others may require more. Other industry experts speculate that by the time the dust settles, there could well be over 60 rulemakings to clarify various aspects of the new law.

“This law has a huge potential impact,” said Jonathan Gottlieb, an energy expert and a partner at the Leonard, Street & Deinard law firm in Washington, D.C.

He added, “People were focusing on the consumer aspect of this law, but this section on over-the-counter derivatives is actually the most important one because it will subject an entire sector of the economy, the second largest consumer of capital after real estate, to regulations while it was not regulated before.”

Under the Act, with a few exceptions, swaps must be traded and cleared on regulated trading platforms or exchanges, such as the New York Mercantile Exchange, the Chicago Board of Trade and the ICE Futures in London. The reason for these clearing and exchange trade requirements is to bring greater transparency to a market that until now has operated under the radar without oversight.

The clearance requirement for every swap transaction means traders will have to post collateral before a swap deal is executed. Collateral will commensurate with risk exposure to the swap, Gensler explained at a Columbia University seminar last spring.

The new law also imposes capital and margin requirements on swap dealers and major swaps participants. Dealers are mostly big banks that have turned the $600-billion swaps market into a cash-cow in recent years.

However, the law curves out a narrow exception to these strict requirements for entities or people who are not trading for speculative purposes. These are non-financial entities—mostly government agencies, pension funds and other public institutions—that are using swaps to hedge or mitigate their commercial risk. Moreover, the CFTC has to be notified of the exemption.

Gottlieb says these clearing and exchange trading requirements will come with added transaction costs, so some traders may want to qualify for these exemptions to avoid all or part of the extra expense.

The new law also requires swaps that are not accepted for clearing to be reported to either swap data repository maintained by exchange operators or to the CFTC by swap dealers and major swap participants.

However, in a swap transaction where neither party is a dealer or a major swap participant, the responsibility of reporting will fall on one of the parties. The mechanism for reporting still has to be worked out by the CFTC. Swaps open as of July 15 will be subject to reporting.

In addition, large swap traders will be required to keep records of all their swap trades and positions in a manner prescribed by the CFTC. The new law also requires exchanges to adopt “necessary and “appropriate” position limits for traders using their platforms. Those swaps not traded on exchanges will be subject to the CFTC’s aggregate position limits.

The CFTC also has new powers to regulate foreign exchanges such as ICE Futures that do business in the United States. Moreover, as part of the reform, banks will be required to spin-off their energy swaps operations into separately capitalized entities that can’t access federally-insured deposits. This could reduce liquidity in the market, analysts said.