United States

Topic: Clearing and settlement

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CFTC and ESMA sign enhanced MoU related to certain recognised CCPs

On 7 January 2021, the United States’ Commodity Futures Trading Commission (CFTC) and the European Securities and Markets Authority (ESMA) announced that they had signed a new Memorandum of Understanding (MoU) regarding cooperation and exchange of information with respect to certain registered derivatives clearing organisations established in the United States that are central counterparties (CCPs) … Continue Reading

Supervisory Guidance on managing FX settlement risk and the Global FX Code

On 18 December 2020, there was published a letter from the chairs from the Basel Committee on Banking Supervision (BCBS) and the Committee on Payments and Market Infrastructures (CPMI) encouraging bank supervisors and banks and other participants in the FX market to follow the expectations set out in the 2013 BCBS Supervisory Guidance on managing … Continue Reading

FSB paper – Continuity of access to FMIs for firms in resolution: Informal summary of outreach and Q&A

On 9 December 2020, the Financial Stability Board (FSB) issued a paper setting out the answers to questions raised at a virtual outreach meeting which sought to provide stakeholders with further information concerning the questionnaire that was published in August for gathering information about continuity of access to financial market infrastructures (FMIs) for firms in … Continue Reading

OTC Derivatives Market Reforms – 2020 Note on Implementation Progress

On 3 December 2020, the Financial Stability Board (FSB) published a note regarding the progress made in implementing the over-the-counter (OTC) derivatives market reforms. The key message in the note is that overall implementation of the G20’s OTC derivatives reforms is well advanced, but there has been limited progress since October 2019 across Financial Stability … Continue Reading

FSB releases guidance on CCP financial resources for resolution and announces further work

On 16 November 2020, the Financial Stability Board (FSB) published final guidance on financial resources to support central counterparty (CCP) resolution and on the treatment of CCP equity in resolution. Ensuring the availability of adequate resources and tools for CCP resolution and understanding the potential for certain resources and tools to have an adverse effect … Continue Reading

BoE MoU with CFTC for supervision of cross-border clearing organisations

On 20 October 2020, there was published a memorandum of understanding (MoU) between the Bank of England (BoE) and the United States Commodity Futures Trading Commission (CFTC) regarding cooperation and the exchange of information in the supervision and oversight of clearing organisations that operate on a cross-border basis in both the United States and the … Continue Reading

FSB questionnaire on continuity of access to FMIs for firms in resolution

On 14 August 2020, the Financial Stability Board (FSB) published a common template for gathering information about continuity of access to financial market infrastructures (FMIs) for firms in resolution. The template takes the form of a questionnaire that all FMIs are encouraged to complete. The questionnaire covers: general information on the FMI and its legal … Continue Reading

ISDA board statement on adherence to the IBOR Fallback Protocol

On 29 July 2020, the ISDA issued a statement on adherence to the IBOR Fallback Protocol. Among other things the statement provides: “As part of its work, ISDA will soon publish the IBOR Fallback Protocol to facilitate inclusion of the new fallbacks in existing non-cleared IBOR derivatives transactions between counterparties that both adhere to the … Continue Reading

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
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