United States

Topic: Clearing and settlement

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Joint statement by UK and US authorities on continuity of derivatives trading and clearing post-Brexit

On 25 February 2019, the UK and US authorities issued a joint statement on continuity of derivatives trading and clearing post Brexit. The joint statement covers the following issues: Continued supervisory cooperation. The Bank of England (BoE) and the Commodity Futures Trading Commission (CFTC) are in the process of updating, in connection with the UK’s … Continue Reading

SEC adopts new Form ATS-N and amendments to Regulation ATS to increase transparency and oversight of alternative trading systems

On July 18, 2018, the Securities and Exchange Commission (“SEC”) voted to adopt amendments to Regulation ATS that impose additional public disclosure requirements on, and enhance the SEC’s oversight of alternative trading systems (“ATSs”) that facilitate transactions in National Market System stocks (“NMS Stock ATSs”). Regulation ATS, adopted in 1998, established a regulatory framework intended … Continue Reading

CFTC registers LedgerX to trade, clear Bitcoin derivatives

The Commodity Futures Trading Commission (CFTC) recently approved two applications from LedgerX – a platform for trading and clearing Bitcoin options – to become registered as a swap execution facility (SEF) and derivatives clearing organization (DCO). These approvals make LedgerX the first DCO and the second SEF approved to facilitate digital currency-related derivatives activity (another … Continue Reading

CFTC Chairman Massad announces priorities for remainder of 2016

On September 8, 2016, the CFTC held an open meeting where the Commissioners: (i) unanimously approved two final rules regarding system safeguards and testing requirements for derivatives trading platforms, clearinghouses, and data repositories, and (ii) approved, over Commissioner Bowen’s dissent, a “comparability determination” for purposes of substituted compliance with Japan’s regulations regarding margin requirements for … Continue Reading

CFTC and futures exchange enforcement actions: A year in review (2015)

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

FRB reports on progress in plan to improve US payments system

On February 2, 2016, the Federal Reserve Board (FRB) issued a progress report on its current initiative to improve the US payments system. While the FRB has been studying this issue for several years, last year it issued specific strategies on ways to improve the system’s speed, efficiency and security. Progress on the strategies thus … Continue Reading

CFTC finalizes its Dodd-Frank margin requirements for uncleared swaps of certain swap dealers

The Commodity Futures Trading Commission (“CFTC”) has announced its adoption of final regulations to implement the sections of the Dodd-Frank Act that impose margin requirements for swaps involving certain registered swap dealers (“covered swap entities” or “CSEs”) that have not been cleared by a derivatives clearing organization (“uncleared swaps”). These regulations are very similar to … Continue Reading

CFTC proposes rules on automated trading

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 proposes amendments to Part 45 swap data recordkeeping and reporting requirements for cleared swaps

The Commodity Futures Trading Commission (“CFTC” or “Commission”) today proposed amendments to its rules relating to swap data reporting in connection with cleared swaps (the “Proposal”). Comments on the proposal must be submitted to the CFTC 60 days after the Proposal is published in the Federal Register. As of the date of this post, such … Continue Reading

CFTC issues first-of-its-kind exemption from DCO registration to foreign clearing organization

On August 18, 2015 the Commodity Futures Trading Commission (“CFTC’”) issued an order of exemption from registration as a derivatives clearing organization (“DCO”) to ASX Clear (Futures) Pty Limited (“ASX Clear”) of Sydney, Australia. This is the first exemption of this nature. It is based on the CFTC’s authority under section 5b(h) of the Commodity … Continue Reading

CFTC views cybersecurity and data integrity as top priorities; may issue regulations

Cybersecurity has recently become a high priority issue at the US Commodity Futures Trading Commission (CFTC) – the agency overseeing designated contract markets, swap execution facilities, derivatives clearing organizations, swap data repositories (SDRs), swap dealers, futures commission merchants, commodity pool operators and other derivatives market participants. CFTC Articulates Unique Cybersecurity Concerns CFTC Chairman Timothy Massad … Continue Reading

US considers changes to Dodd-Frank Act that would benefit agribusiness

Although the derivatives reforms enacted as a part of the Dodd-Frank Act were targeted primarily towards the regulation of Wall Street banks, they also have had an adverse, unintended impact of agribusiness companies that use derivatives to lock in prices and hedge their commercial risks. Recently, however, things have begun to change. Terry Arbit and … Continue Reading

Security-based swap reporting rules published by the SEC

The Securities and Exchange Commission on February 11 published the texts of two final rules and one proposed rule that establish reporting requirements for security-based swaps (SBSs).   These rules, previously adopted by the SEC in a meeting on January 14, 2015, create a reporting regime for SBSs that largely parallels the swaps reporting regime adopted … Continue Reading

CFTC staff issues extensions of no-action relief to Japan Securities Clearing Corporation and Eurex Clearing AG

On December 22 and 23, 2014, the Commodity Futures Trading Commission’s (CFTC’s) Division of Clearing and Risk (DCR) issued extensions of previously granted “no-action relief” to Japan Securities Clearing Corporation (JSCC) located in Tokyo, Japan, and Eurex Clearing AG (Eurex Clearing) located in Eschborn, Germany, respectively. The relief allows JSCC and Eurex Clearing to continue … Continue Reading

Private industry subcommittee submits recommendation to CFTC on mandatory clearing for FX NDFs

On December 22, 2014, the CFTC announced that its Subcommittee on Foreign Exchange Markets (“FEM”), which is comprised of several private industry market participants, submitted a report to the CFTC’s Global Markets Advisory Committee regarding a potential clearing mandate for foreign exchange (“FX”) non-deliverable forwards (“NDFs”). The CFTC invited comments on the FEM report, but … Continue Reading

CFTC staff extends no-action relief – allows four foreign clearing organizations to continue clearing swaps for US persons

On December 18, 2014, the Commodity Futures Trading Commission’s (“CFTC’s”) Division of Clearing and Risk (“DCR”) issued extensions of previously granted “No-Action” relief to four foreign clearing organizations. The relief allows these foreign clearing organizations to continue to clear swaps for certain United States persons (“U.S. persons”) without being registered as a derivatives clearing organization … Continue Reading

SEC adopts rules designed to improve systems compliance and integrity

On November 19, 2014, the SEC adopted Regulation SCI – Regulation Systems Compliance and Integrity, to require: national securities exchanges alternative trading systems that exceed defined volume thresholds (but excluding ATSs limited to municipal securities and corporate debt) registered clearing agencies quotation and last sale reporting processors, and certain exempt clearing agencies whose exemptions were … Continue Reading

CFTC proposes to “fine-tune” rules to protect commercial end users

On November 3, the CFTC proposed what new Chairman Timothy Massad described as “further fine-tuning of our rules” to avoid “unintended consequences on . . . nonfinancial commercial companies . . .  .”  This post addresses the CFTC’s proposals regarding: 1)     recordkeeping requirements; and 2)     the deadline for posting “residual interest.” Recordkeeping requirements The CFTC … Continue Reading

US agencies re-propose margin and capital requirements for certain swap dealers and participants

On September 3, 2014, the US banking agencies (the Federal Reserve Board, the Federal Deposit Insurance Corporation and the Office of Comptroller of the Currency), along with the Federal Housing Finance Agency (FHFA) and the Farm Credit Administration (FCA), issued for comment a proposed rule that would implement the sections of the Dodd-Frank Wall Street … Continue Reading
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