The Commodity Futures Trading Commission filed and settled charges against two unrelated Singapore-based commodities trading firms for not filing with it reports of their physical positions. In one action naming Golden Agri International Pte Ltd., the CFTC claimed that, from April 2014 through October 2015, the firm failed to file with it five Form 204 reports identifying the physical positions associated with its hedge positions in soybean oil futures. Golden Agri agreed to pay a fine of US $150,000 to resolve this matter. In a separate action, the CFTC claimed that Agrocorp International Pte Ltd, a cotton dealer, failed to file with it 22 required Forms 304s at various times in 2012 and from October 7, 2014 to February 13, 2015, regarding its physical cotton positions. Agrocorp also agreed to pay a fine of US $150,000 to settle this action.
Compliance Weeds: CFTC Form 204 (Statement of Cash Positions in Grains, Soybeans, Soybean Oil and Soybean Meal) and Parts I and II of Form 304 (Statement of Cash Position in Cotton – Fixed Price Cash Positions) must be filed by any person that holds or controls a position in excess of relevant federal speculative position limits that constitutes a bona fide hedging position under CFTC rules. These documents must be made as of the close of business on the last Friday of the relevant month. Form 204 must be received by the CFTC in Chicago by no later than the third business day following the date of the report, while Form 304 must be received by the Commission in New York by no later than the second business day following the date of the report. Part III of Form 304 (Unfixed Price Cotton “On-Call”) must be filed by any cotton merchant or dealer that holds a so-called reportable position in cotton (i.e., pursuant to large trader reportable levels; click here to access CFTC Rule 15.03) regardless of whether or not it constitutes a bona fide hedge. Form 304 (Part III) must be made as of the close of business on Friday every week, and received by the CFTC in New York by no later than the second business day following the date of the report.
My View: There seems to be a disproportionate percentage of non-US-based market participants caught up in CFTC enforcement actions for alleged breaches of Form 204 and 304 filing requirements. In fact, the relevant rules related to the requirements for filing such forms are a model of imprecision and are likely unclear to most domestic market participants let alone foreigners (click here to access the relevant CFTC Part 19 rules). Reference to the term “reportable” positions in connection with filing requirements as meaning positions in excess of speculative position limits in one circumstance and in excess of large trader reportable levels in another is not easy to follow. Posting of clear instructions in both English and foreign languages on the CFTC’s website would be helpful.