No-Action Letters

Division of Swaps Dealer and Intermediary Oversight takes no-action position on introducing brokers guaranteed by a certain FCM. The Division of Swaps Dealer and Intermediary Oversight took a no-action position with respect to current and potential future introducing brokers guaranteed by a certain registered futures commission merchant, where the IBs would introduce eligible contract participant swap counterparties to each other, without opening or carrying customer accounts with the guarantor FCM. For uncleared swaps, no FCM would be involved in the transaction. For cleared swaps, each counterparty would use an FCM for clearing that the counterparty had selected. The guarantor FCM would remain well-capitalized for the risk undertaken, and would be jointly and severally liable for all obligations of each of the guaranteed IBs with respect to their solicitation of swaps orders. (2/29/2016) CFTC Letter No. 16-23.

Requests for Comment

CFTC requests comment on request for order permitting portfolio margining of futures and foreign futures contracts and cleared swaps contracts. The CFTC is requesting public comment on LCH.Clearnet Ltd.’s request for an order that would allow it and its clearing members (who are registered futures commission merchants) to: (1) commingle in an account subject to Section 4d(f) (a cleared swaps customer account) futures and foreign futures positions and cleared swaps positions, and related customer money, securities, and property; and (2) portfolio margin futures and foreign futures contracts and cleared swaps contracts in the cleared swaps customer account. Comments regarding the request should be submitted on or before March 11th. (2/25/2016) CFTC Press Release.

Other Developments

President Obama to nominate two new members for CFTC leadership.Bloomberg BNA reported that President Obama will nominate two new members to fill CFTC vacancies. Chris Brummer, a professor at Georgetown University Law Center, will be the Democratic nominee. Brian Quintenz, who runs his own money management firm and was an aide to former U.S. Representative Deborah Pryce, is the Republican pick. The five-member CFTC, which was given new powers to supervise the over-the-counter derivatives market in the wake of the 2008 financial crisis, has been operating without a full slate of commissioners. Brummer and Quintenz must be confirmed by the Senate. (3/3/2016) Bloomberg BNA.

Energy and Environmental Markets Advisory Committee recommends that CFTC drop plan to limit futures contracts. DealBook reported that the CFTC’s Energy and Environmental Markets Advisory Committee has recommended that the regulator abandon its plan to limit the number of futures contracts that a trader can hold on certain commodities, including oil and natural gas. (2/24/2016) DealBook.