United States

Topic: Commodities & Derivatives

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CFTC Division of Enforcement Publishes Enforcement Manual

On May 8, 2019, the Division of Enforcement (“Division”) of the Commodity Futures Trading Commission (”CFTC”) announced that it had published its Enforcement Manual (“Manual”). This is the first issuance of a public Manual. Prior to this publication, the Manual was only available internally as a general reference to the Division’s Staff during their investigation … Continue Reading

In anticipation of Brexit, US regulators address status of certain swaps under the Swaps Margin Rule

With the next 10 days being crucial in the Brexit process, following the UK House of Commons rejecting the draft withdrawal agreement for a third time and the European Council calling an emergency summit for April 10, 2019, the Commodity Futures Trading Commission (“CFTC”) and the US banking, farm credit and housing agencies have issued … Continue Reading

CFTC divisions issue their 2019 examination priorities

For the first time, the US Commodity Futures Trading Commission’s (“CFTC”) Division of Market Oversight (“DMO”), Division of Swap Dealer and Intermediary Oversight, and Division of Clearing and Risk published Examination Priorities for the year. While the CFTC has historically published its Rules Enforcement Review of specific commodity exchanges with notes as to areas for … Continue Reading

Mandatory stay provisions in qualified financial contracts

Companies are being, or have been, approached by US banks and/or their affiliates with which they have derivatives contracts or other qualified financial contracts (QFCs) and asked to amend those agreements to cover a situation where the bank or its affiliates might be put into a receivership situation. The reason why they are getting these … Continue Reading

Impact of partial US government shutdown on federal financial regulatory agencies

As a result of the United States Congress not adopting an appropriations bill or a continuing resolution to fund specific government departments, agencies or functions, certain federal agencies are currently subject to a partial government shutdown. Below is an overview of how the partial federal government shutdown is affecting financial or other major regulatory agencies: … Continue Reading

CFTC seeks public comment on crypto-asset mechanics and markets

The Commodity Futures Trading Commission (“CFTC”) published a Request for input on December 17, 2018, seeking public comment and feedback on a set of twenty-five (25) questions to better inform the CFTC’s understanding of the technology, mechanics, and markets for virtual currencies beyond Bitcoin. … Continue Reading

CFTC adopts $8 billion threshold for swap dealer de minimis exception

  On November 13, 2018, the CFTC published its Final Rule (Final Rule) setting its de minimis exception threshold to swap dealer registration and regulation requirements at an aggregate gross notional amount (“AGNA”) threshold of $8 billion in swap dealing activity. Under the de minimis exception as originally adopted, a person would not be deemed … Continue Reading

CFTC Commissioner Brian Quintenz warns smart contract code developers may be held liable for violations of CFTC regulations

On October 16, 2018, Commissioner Brian Quintenz of the Commodity Futures Trading Commission (“CFTC”) shared his views on smart contract regulation by the CFTC. In his speech at the 38th Annual GITEX Technology Week Conference, in discussing a hypothetical where code in a smart contract was specifically designed to enable a type of activity regulated … Continue Reading

Regulators bring enforcement actions against 1pool Ltd.

On September 27, 2018, both the Securities and Exchange Commission (“SEC”) and the Commodity Futures Trading Commission (“CFTC”) filed charges against Marshall Islands-based firm 1pool Ltd. (“1pool”) and its Austria-based CEO and owner, Patrick Brunner, for (i) failing to register as a security-based swaps dealer with the SEC, (ii) failing to register as a futures … Continue Reading

CFTC Chair hails the accomplishments of the past year’s enforcement program

On October 2, 2018, Commodity Futures Trading Commission (“CFTC”) Chairman J. Christopher Giancarlo spoke before the Economic Club of Minnesota, giving a detailed overview of the CFTC’s enforcement program for fiscal year 2017 (Oct. 2017 – Sept. 2018), entitling his remarks “Regulatory Enforcement & Healthy Markets: Perfect Together!” The CFTC’s enforcement program filed 83 actions … Continue Reading

CFTC’s Giancarlo’s Cross-Border White Paper 2.0 signals upcoming rule proposals to replace cross-border guidance

On October 1, 2018, the Commodity Futures Trading Commission’s (“CFTC”) Chairman, J. Christopher Giancarlo released a White Paper entitled, “Cross-Border Swaps Regulation Version 2.0: A Risk-Based Approach with Deference to Comparable Non-U.S. Regulation” (“Cross-Border White Paper 2.0”). Chairman Giancarlo intends to direct the CFTC staff to put forth new rule proposals, which if adopted, would … Continue Reading

CFTC proposes process on exempting non-US derivative clearing organizations

On August 8, 2018, the U.S. Commodity Futures Trading Commission (CFTC) announced a notice of proposed rulemaking, which if adopted as proposed, would set out the policies and procedures for clearing organizations located outside of the United States to follow if they want to obtain an exemption from registration as a derivatives clearing organization (DCO). … Continue Reading

More guidance on the new FinCEN “beneficial ownership” rule

In May 2016, the Financial Crimes Enforcement Network (FinCEN), the U.S. agency tasked with issuing anti-money laundering (AML) regulations, issued a final rule requiring that certain categories of financial institutions identify the beneficial owners of their legal entity customers and incorporate customer due diligence procedures into their required AML compliance programs. The regulation was effective … Continue Reading

New York State starts cryptocurrency exchange inquiry; SEC and CFTC foresee additional cryptocurrency and ICO regulation

On April 17, 2018, New York Attorney General Eric T. Schneiderman took the first steps in launching the new Virtual Markets Integrity Initiative through a fact-finding questionnaire sent to thirteen of the major cryptocurrency trading platforms. The Initiative’s focus is protecting consumers and increasing transparency for both investors and enforcement agencies.  “Yet too often, consumers … Continue Reading

November 2 Norton Rose Fulbright New York briefing to focus on SEC/CFTC Enforcement Trends

Norton Rose Fulbright New York office’s next financial services briefing is a luncheon seminar set for Thursday, November 2, 2017, at 12:00-1:00 PM EDT. Each month, Norton Rose Fulbright’s senior practitioners will provide interested in-house counsel and professionals with an insightful discussion on current regulatory trends within the financial services sector. The November briefing will … Continue Reading

US federal banking regulators issue risk-based capital guidance for certain derivatives

On August 14, 2017, the US federal banking agencies (Federal Reserve Board (FRB), Office of the Comptroller of the Currency (OCC), Federal Deposit Insurance Corporation (FDIC)) issued interagency guidance on the risk-based capital treatment of certain centrally cleared derivative contracts. The guidance was issued because some central counterparties recently modified margin requirements for certain centrally … 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

SEC determines US securities laws apply to capital-raising via blockchain

On July 25, 2017, the US Securities and Exchange Commission (“SEC”) issued an investigative report stating that US securities laws apply to sales of securities in the United States purchased with virtual currencies or distributed with blockchain technology. At the same time, it issued an Investor Bulletin on so-called “Initial Coin Offerings” (ICOs) to caution … Continue Reading

Incriminating IMs lead to Singapore precious metals trader settling, pleading guilty to charges of spoofing, manipulation and wire fraud

A former futures trader recently agreed to a settlement order from the U.S. Commodity Futures Trading Commission (“CFTC”) imposing a permanent trading ban for spoofing and manipulation, and pled guilty to criminal charges of manipulation and wire fraud, for trading done in the precious metals market. David Liew was a trader on a major financial … Continue Reading

CFTC amends regulations to prohibit restrictions on employee communication concerning potential Commodity Exchange Act violations

On May 22, 2017, the Commodity Futures Trading Commission (“CFTC”) amended Part 165 of its regulations, which govern whistleblower incentives and protections. In addition to strengthening existing anti-retaliation protections for whistleblowers, the amendments also prohibit employers from restricting employees from reporting potential violations of the Commodity Exchange Act directly to the CFTC. This prohibition extends … Continue Reading

CFTC staff issues relief to swap dealers from CFTC’s regulations on margin requirements for uncleared swaps

The Commodity Futures Trading Commission’s (“CFTC” or “Commission”) Division of Swap Dealer and Intermediary Oversight (“DSIO”) recently issued relief to CFTC-registered swap dealers (“SDs”) from compliance with certain CFTC uncleared swaps margin requirements under two No-Action letters (“NALs”). The relief under these two NALs extends only to those SDs that are obliged to comply with … Continue Reading

OCC finalizes regulatory proposals on national bank receiverships and copper transactions

The Office of the Comptroller of the Currency (“OCC”) recently finalized two outstanding regulatory proposals. The OCC adopted a final rule addressing receiverships of national banks that lack federal deposit insurance (“uninsured national banks”). The OCC also finalized its rule on restrictions on a national bank’s transactions in industrial and commercial metals, including a ban … Continue Reading

Smart contracts and innovation are focus of next Norton Rose Fulbright New York briefing

Norton Rose Fulbright New York office’s next 40-minute financial services briefing is set for Thursday, January 5, 2017 at 12:00 noon EST. Each month, Norton Rose Fulbright’s senior practitioners will provide interested in-house counsel and professionals with an insightful discussion on current regulatory trends within the financial services sector. The briefings will stick strictly to … Continue Reading
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