On September 5th, the Wall Street Journal summarized comments made by Commodity Futures Trading Commission (“CFTC”) Chair Timothy Massad. The CFTC is working with the SEC, FDIC, OCC and Federal Reserve Board concerning the removal by some banks of the guarantees included in their cross-border swaps transactions. Scrutiny.
CFTC Will Permit the Deposit of Customer Funds with U.K. Firms
On August 28th, the CFTC’s Division of Swap Dealer and Intermediary Oversight issued an interpretation of Commission Regulation 30.7(c). The interpretation permits futures commission merchants to deposit customer funds margining foreign futures positions with U.K.-licensed investment firms that hold such funds in accordance with either U.K. Financial Conduct Authority’s client money rules or as bank deposits subject to U.K. Prudential Regulation Authority regulations. The interpretation addresses requests received from FCMs for confirmation that an FCM is not waiving protections provided to customer funds if it elects to deposit customer funds with U.K. investment firms that are licensed banks as bank deposits subject to PRA regulation in lieu of client money deposits subject to FCA regulation. CFTC Press Release.
On August 26th, Financial News summarized a letter from the Committee on Capital Market Regulation to CFTC Chair Timothy Massad and European Commission Vice Chair Michel Barrier. The letter provides suggestions on how the U.S. and E.U. can coordinate the cross-border clearing of swaps. Coordinating Swaps.
CPO Registration Relief Granted to Freddie Mac and Fannie Mae
On August 25th, the CFTC’s Division of Swap Dealer and Intermediary Oversight granted the Federal Home Loan Mortgage Corporation and the Federal National Mortgage Association no-action relief exempting, under certain conditions, each entity from the commodity pool registration requirements with respect to their operation of a mortgage credit risk sharing initiative. CFTC Letter No. 14-111.
Transmission Congestion Rights Relief Extended
On August 22nd, the CFTC’s Divisions of Clearing and Risk, Market Oversight, and Swap Dealer and Intermediary Oversight issued a no-action letter to Southwest Power Pool that extends, for a limited period of time, the relief previously granted by the Divisions. The extension continues to provide relief to Southwest Power Pool, its members and other specified market participants with respect to certain transactions on Southwest Power Pool’s Integrated Marketplace. This extension will last until the earlier of February 28, 2015 or the date on which the Commission takes final action on Southwest Power Pool’s request for exemptive relief.
SEF Relief from Confirmation and Recording Requirements
On August 18th, the CFTC’s Division of Market Oversight granted time-limited no-action relief to swap execution facilities to permit incorporation by reference previously-negotiated freestanding agreements into SEF-generated confirmations for uncleared swap transactions, executed on or pursuant to the rules of a SEF, without the SEF receiving the freestanding agreements prior to execution or maintaining them afterwards.