Final Rules

CFTC adopts regulations on margin requirements for uncleared swaps for swap dealers and major swap participants. The US Commodity Futures Trading Commission adopted regulations to implement a provision of the Commodity Exchange Act added by the Dodd-Frank Wall Street Reform and Consumer Protection Act. The provision requires the CFTC to adopt initial and variation margin requirements for certain swap dealers and major swap participants. The final rules will become effective April 1, 2016. The CFTC also adopted and invited comment on an interim final rule that will exempt certain uncleared swaps with certain counterparties from these margin requirements. This interim final rule implements Title III of the Terrorism Risk Insurance Program Reauthorization Act of 2015, which exempts from the margin rules for uncleared swaps, certain swaps for which a counterparty qualifies for an exemption or exception from clearing under the Dodd-Frank Act. Comments on the interim final rule must be received on or before February 5, 2016. (1/6/2016) CFTC Rule.

No-Action Relief

No-action relief extended on masking certain reportable identifying information.The CFTC announced that its Division of Market Oversight (DMO) has issued a letter providing a conditional, time-limited extension of the relief provided in CFTC Letter 13-41 regarding masking of certain identifying information required to be reported. (1/15/2016) CFTC press release.

CFTC’s Division of Clearing and Risk delivers no-action relief to small bank holding companies and Community Development Financial Institutions. The CFTC’s Division of Clearing and Risk (DCO) issued no-action relief from the swap clearing requirement to small bank holding companies and savings and loan holding companies having consolidated assets of $10 billion or less, as well as Community Development Financial Institutions that have received a certification from the US Department of the Treasury (CDFIs). (1/8/2016) CFTC press release.

CFTC Enforcement

Federal court orders approximately US$500 million in sanctions for global commodity futures and options fraud. The CFTC announced that the US District Court for the Northern District of Illinois entered a default judgment against Nikolai S. Battoo and his three companies. Pursuant to the order, Battoo and his companies must pay restitution in the amount of US$294,246,741.63 to the victims of their fraud, as well as a US$147 million civil monetary penalty, and also must disgorge US$49 million that Battoo received as ill-gotten gains. The order stems from a 2012 CFTC complaint charging the defendants with making fraudulent misrepresentations and omissions in connection with significant losses sustained by commodity pools through periodic account statements and asset verification documents, as well as through telephone calls and letters to pool participants. (1/13/2016) CFTC press release.

Other Developments

CFTC delegates to NFA responsibilities related to notices of swap valuation disputes. The CFTC issued an order delegating to the National Futures Association (NFA) particular responsibilities that are related to notices of swap valuation disputes filed by swap dealers and major swap participants pursuant to CFTC Regulation 23.502(c). (1/14/2016) CFTC press release.

Technology Advisory Committee to meet. The CFTC announced that its Technology Advisory Committee (TAC) will be holding a public meeting at its Washington, DC headquarters on Tuesday, January 26, 2016 from 9:45am to 3:45pm. The TAC will discuss the CFTC’s proposed Regulation Automated Trading (Reg AT), swap data standardization and harmonization, and blockchain and the potential application of distributed ledger technology to the derivatives market. (1/13/2016) CFTC press release.