Barclays Bank plc agreed to pay a fine of US $560,000 to settle charges brought by the Commodity Futures Trading Commission saying that, from March 1, 2013, through October 29, 2014, it failed to submit accurate large trader reports of physical commodity swap positions as required by applicable law and CFTC regulations. (In general, under applicable law and CFTC regulations, swap dealers and other reporting entities are required to file with the Commission on a daily basis reports of swap positions involving certain physical commodities in excess of certain minimum levels in particular formats.) The CFTC claimed that, during the relevant time, Barclays submitted LTRs to it that included “inaccurate position information caused by missing or inaccurate prices in crude oil, natural gas, gasoline, heating oil, and agricultural products.” The CFTC said that some of the incorrect information came from third-party vendors. Moreover, noted the CFTC, in some instances, Barclays’ own systems detected the potential problems, but did not remedy the errors before submitting LTRs to the CFTC. In resolving this matter with Barclays, the CFTC acknowledged that, during the relevant period, the firm communicated with staff regarding its issues and fixed them “as necessary to comply with its LTR reporting requirements.”
Compliance Weeds 1: Previously, the CFTC filed charges against the Australia and New Zealand Banking Group Ltd. for also violating regulatory requirements related to the reporting of large swap positions involving physical commodities. The CFTC alleged that, from at least March 1, 2013, to November 20, 2014, ANZ failed on certain days to submit any reports of its large positions, while at other times it “routinely” submitted required reports that included errors. ANZ settled the CFTC’s charges by agreeing to pay a fine of US $150,000 (Click here for background regarding this matter and a discussion of LTR requirements generally in the article, “Australian-Based Swap Dealer Sanctioned by CFTC in First Case for Violations of Large Trader Reporting Requirements for Physical Commodity Swap Positions” in the September 20, 2015 edition of Bridging the Week.) The CFTC considers accurate LTRs critical for its oversight of markets and market activity and appears to prioritizing enforcement actions involving allegedly deficient LTRs.
Compliance Weeds 2: Certain large trader reporting requirements that were adopted by the Commodity Futures Trading Commission during November 2013 and subsequently postponed will soon be mandatory. Specifically, it will soon be required to electronically submit certain large traders’ and position holders’ data regarding their futures and swaps holdings on updated forms as follows:
- new Form 102A to identify holders of large positions;
- new Form 102B to identify traders that exceed a stated volume of transactions (50 contracts/day on a notional value basis; “volume threshold accounts”) during a single trading day (regardless of end-of-day positions);
- new Form 102S to identify holders of certain swaps positions;
- new Form 40/40S to collect information from reporting traders; and
- new Form 71 to collect information on omnibus volume threshold accounts.
Under the CFTC’s latest revised schedule, new requirements related to the electronic reporting of:
- Forms 102A, 102B (for Designated Contract Market volume trading threshold accounts) and 102S go into effect on September 29, 2016;
- Forms 40, 40S and new Form 71 go into effect on November 18, 2016; and
- Form 102B (for Swap Execution Facility volume threshold trading accounts) goes into effect on August 30, 2018.