Today, in a move on its long-pending proposals, the CFTC: (1) re-proposed its new speculative position limits rules (the “Re-Proposal”), which would impose federal limits on 25 physical commodity futures contracts and their “economically equivalent” futures, options, and swaps; and (2) separately issued final rules relating to position aggregation requirements (the “Final Aggregation Rules”). We … Continue Reading
On October 13, 2016, the Commodity Futures Trading Commission (“CFTC’”) unanimously issued an order establishing December 31, 2018 as the swap dealer de minimis threshold phase-in termination date (the “Order”). The Order is effective October 13, 2016. Summary of the Order Pursuant to CFTC Regulation 1.3(ggg), a person shall not be deemed to be a swap … Continue Reading
On October 11, the Commodity Futures Trading Commission (“CFTC’”) issued proposed rules and interpretations (the “Proposed Rule”) addressing the cross-border application of certain swap provisions of the Commodity Exchange Act. Generally speaking, the Proposed Rule aims to: (1) codify certain aspects of the CFTC’s earlier guidance on the cross-border aspects of its swaps regulations (the … Continue Reading
Market participants must be mindful of the robust enforcement environment at the CFTC and U.S. futures exchanges. In 2015, the CFTC brought numerous enforcement actions and continued to impose aggressive civil monetary penalties on market participants, including energy and agricultural companies. Significantly, the CFTC also started to pivot from implementing to enforcing its regulations promulgated … Continue Reading
The CFTC has proposed a set of rules, referred to collectively as proposed Regulation AT, that would, for the first time, impose risk control and other requirements governing algorithmic trading systems (ATSs) in futures contracts, options, and swaps traded on designated contract markets (DCMs) such as CME, CBOT, NYMEX, and ICE Futures US. Regulation AT … Continue Reading
CFTC staff has published for public comment a Preliminary Report regarding the level of swap dealing activity that is considered “de minimis” and therefore does not require an entity to register as a swap dealer with the CFTC. Comments must be filed on or before January 19, 2016. The de minimis threshold CFTC rules adopted … Continue Reading
On September 24, 2015 the CFTC issued an Order settling an enforcement action against TeraExchange, a provisionally registered swap execution facility (SEF). According to the Order, TeraExchange failed to enforce its rules prohibiting wash trading and pre-arranged trading. In fact, the Order found, TeraExchange affirmatively arranged for two market participants to enter into the SEF’s … Continue Reading
On September 22, 2015, the CFTC issued a “supplemental” proposed rulemaking (the “2015 Proposal”) to revise its long-pending proposal on aggregation for position limit purposes published in November 2013 (the “2013 Proposal”). The 2015 Proposal, if finalized, would provide companies with over 50% ownership or equity interest in affiliated entities with an easier mechanism to … Continue Reading
The SEC recently adopted new rules that outline the registration process for security-based swap dealers and major security-based swap participants (“SBS Entities”). Section 764 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) amended the Securities Exchange Act of 1934 (the “Exchange Act”) to require the registration of SBS Entities with the … Continue Reading
The SEC adopted a new rule mandated by the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd Frank Act”) that requires public companies to disclose the ratio of the compensation of its chief executive officer (“CEO”) to the median compensation of its employees. The rule requires disclosure of this pay ratio in registration … Continue Reading
On May 18, 2015, the CFTC published in the Federal Register its final revised 7-part Interpretation regarding “forward contracts with embedded volumetric optionality.” The final guidance provides useful clarification in determining when a contract with an embedded volumetric option qualifies for the forward contract exclusion from the “swap” and “future delivery” definitions under the Commodity … Continue Reading
On May 7, 2015, the CFTC published in the Federal Register a proposal to eliminate the odd-yet-burdensome Form TO, which for the past two years has been required of derivatives end-users to report certain information to the CFTC regarding their trading in commodity trade options. If the proposal is adopted as final after the close … Continue Reading
Metlife is contesting a preliminary designation as a nonbank financial company posing a risk to the financial stability of the United States. Such a designation would subject it to supervision by the Federal Reserve Board and additional standards with which it would have to comply. One of the major objectives of The Dodd-Frank Wall Street … Continue Reading
A federal district court has handed the Commodity Futures Trading Commission (CFTC) a substantial victory, largely rejecting a legal challenge to the agency’s cross-border interpretive guidance brought by financial trade associations such as SIFMA and ISDA. The court’s Opinion means that, absent a successful appeal, the CFTC’s Guidance and its cross-border application of its Dodd-Frank … Continue Reading
A federal district court has handed the Commodity Futures Trading Commission (CFTC) a substantial victory, largely rejecting a legal challenge to the agency’s cross-border interpretive guidance brought by financial trade associations such as SIFMA and ISDA. The court’s Opinion means that, absent a successful appeal, the CFTC’s Guidance and its cross-border application of its Dodd-Frank swap … Continue Reading
The U.S. House of Representatives has passed H.R. 4413, a bill that would reauthorize the Commodity Futures Trading Commission (CFTC) and also make some important changes to the Commodity Exchange Act (CEA), including changing the definition of the term “swap” in a way that would benefit certain physical market participants. H.R. 4413, which currently is … Continue Reading
CME Group Exchanges are adopting new Rule 575 to codify particular types of disruptive order entry and trading practices that are prohibited as abusive to the orderly conduct of trading or the fair execution of transactions, effective September 15, 2014… Continue Reading
This Summer, the Securities and Exchange Commission (SEC) adopted long-awaited rules on cross-border security-based swap activities. The SEC’s rules provide: 1) an explanation of when a cross-border transaction must be counted towards the requirement to register as a security-based swap dealer (SBSD) or major security-based swap participant (MSBSP), including transactions guaranteed by a US person … Continue Reading
The Securities and Exchange Commission (“SEC”) has proposed to extend temporary Rule 206(3)-3T under the Investment Advisers Act of 1940 (the “Advisers Act”) from December 31, 2014 until December 31, 2016. Rule 206(3)-3T establishes an alternative means for registered investment advisers that are also registered as broker-dealers (“Dual Registrants”) to meet the requirements of Section … Continue Reading
During an otherwise quiet Summer at the Commodity Futures Trading Commission (CFTC), agency staff hosted a public Roundtable where commercial end-users and other market participants could comment on the CFTC’s re-proposed rules to implement the position limits and aggregation provisions of the Dodd-Frank Act. The common theme from end-users was that the CFTC’s proposals would … Continue Reading
Staff of the Commodity Futures Trading Commission (CFTC) has issued a no-action letter to swap execution facilities (SEFs), through September 30, 2015, if a SEF: 1) incorporates by reference the terms of underlying previously-negotiated agreements between swap counterparties in its confirmation without receiving copies of those agreements by the time the trade is executed; or … Continue Reading