Dodd-Frank Act Registration Requirements for CTAs.
On December 23rd, the CFTC's Division of Swap Dealer and Intermediary Oversight issued an advisory that provides guidance regarding requirements imposed on commodity trading advisors ("CTAs") by the Dodd-Frank Act. The Dodd-Frank Act amended the statutory definition of CTA to include any person who engages in the business of advising others on swaps. Additionally, certain CTAs who were previously exempt from registration with the CFTC are now required to register because of the CFTC's rescission of Commission Regulation 4.13(a)(4) and amendments to Commission Regulation 4.5. The advisory provides guidance on the potential new advisory obligations of CTAs arising from the Dodd-Frank Act. It also informs the newly expanded class of CTAs and those previously exempt CTAs as to the general regulatory framework. CFTC Press Release.
Swaps Registration Relief.
On December 31st, the CFTC's Division of Market Oversight issued a no-action letter providing time-limited relief relating to certain occasional, off-facility, cleared credit default swaps ("CDS") that are entered into pursuant to a derivatives clearing organization's ("DCO") rules related to its price submission process for determining end-of-day settlement prices for cleared CDS. Additionally, the letter extends the relief provided by the Division under CFTC Letter No. 12-59 and CFTC Letter No. 13-36 in connection with the reporting requirements of Part 45, allowing the DCO to fulfill all of the reporting counterparty's obligations with respect to reporting certain CDS trades executed pursuant to a CDS Settlement Price Process. All no-action relief provided by this letter will expire on September 30, 2014. CFTC Press Release.
Annual Reporting Relief for Certain CCOs.
On December 30th, the CFTC's Division of Swap Dealer and Intermediary Oversight issued two no-action letters that provide certain futures commission merchants, swap dealers, and major swap participants with limited relief surrounding the requirement that chief compliance officers of such firms prepare and submit an Annual Report. In CFTC Letter No. 13-85, DSIO provided relief for swap dealers that: (1) are not required, prior to December 31, 2013, to register with the CFTC as swap dealers; and (2) have a fiscal year-end of December 31, 2013. In that no-action letter, DSIO stated that it will not recommend that the CFTC take an enforcement action against any such firm, or a chief compliance officer of any such firm, for failing to prepare an Annual Report and furnish such Report to the CFTC for the fiscal year that ends on December 31, 2013. In CFTC Letter No. 13-84, DSIO provided relief to all futures commission merchants, swap dealers, and major swap participants concerning the deadline for furnishing a copy of the Annual Report to the CFTC. The no-action relief provided in that letter is limited to the Annual Report required to be furnished by such firms during calendar year 2014.
IB Reporting Relief.
On December 23rd, the CFTC's Division of Swap Dealer and Intermediary Oversight issued a no-action letter that provides relief for certain Introducing Brokers ("IBs") from certain financial reporting and capital computation requirements. The Division will not recommend an enforcement action for certain IBs from compliance with financial reporting requirements imposed by CFTC regulations concerning (1) the treatment of liabilities to employees contingent upon the receipt of certain commission receivables when calculating the minimum net capital requirement, (2) the use of International Financial Reporting Standards for certified and unaudited financial statements by certain qualified Foreign IBs, and (3) the permitted delayed filing of certified financial statements for IBs whose registration was approved by the National Futures Association during the period October 1, 2013 through December 31, 2013. CFTC Press Release.
Execution Relief for Risk Mitigation Services.
On December 23rd, the CFTC's Division of Market Oversight announced the issuance of a no-action letter providing swap execution facilities ("SEF") relief in connection with a SEF's provision of certain "basis risk mitigation services." The letter provides relief to registered SEFs providing a basis risk mitigation service for Required Transaction swaps from the requirement in Regulation 37.9(a)(2) that any transaction involving a Required Transaction be executed through an order book or a request for quote system operating in conjunction with an order book, provided that the basis risk mitigation service operates in accordance with a SEF rule that meets the conditions contained in DMO's no-action letter. The relief extends through 11:59 p.m. on December 31, 2014. CFTC Press Release.
On December 23rd, the CFTC's Division of Swap Dealer and Intermediary Oversight issued a no-action letter that provides relief from certain conditions of the swap dealer exclusion for registered floor traders. Specifically, the no-action letter provides relief from the aggregation requirement of CFTC Regulation 1.3(ggg)(4)(i) and certain conditions under Regulation 1.3(ggg)(6)(iv) that, if met, permit a floor trader, and/or the affiliate of a floor trader, to exclude swaps from the aggregate gross notional amount of swap transactions for purposes of determining whether such person meets the swap dealer definition. CFTC Press Release.
Oral Recording Relief.
On December 20th, the CFTC's Division of Swap Dealer and Intermediary Oversight and the Division of Market Oversight issued a time- limited no-action letter that provides relief to commodity trading advisors that are members of swap execution facilities. The relief covers the oral recording requirement set forth in Commission Regulation 1.35(a). The relief expires on May 1, 2014. CFTC Press Release.
SEF Registration Relief.
On December 20th, the CFTC's Division of Market Oversight issued a no-action letter providing conditional time-limited relief for Australian-based trading platform Yieldbroker Pty Limited. DMO will not recommend that enforcement action be taken against Yieldbroker for failure to register as a swap execution facility, or against any market participants for use of, or other relationships with, Yieldbroker, for the period expiring on the earlier of May 15, 2014, or the date upon which Yieldbroker achieves SEF registration status. CFTC Press Release.
FCM Registration Relief.
On December 19th, the CFTC's Division of Clearing and Risk issued a time-limited no-action letter to the Singapore Exchange Derivatives Clearing Limited. The Division will not recommend enforcement action against SGX-DC's clearing members for failing to comply with the Commodity Exchange Act futures commission merchant registration requirements in carrying existing positions and accepting for clearing offsetting positions in certain commodity swaps for U.S. customers; or for engaging in activities related to its clearing members carrying and accepting for clearing such positions for U.S. customers. The relief is subject to specified conditions. CFTC Press Release.
DCO Registration Relief Extended.
On December 19th, the CFTC's Division of Clearing and Risk extended the time-limited no-action relief previously granted to Japan Securities Clearing Corporation and its qualifying participants and affiliates with respect to the clearing of yen-denominated interest rate swaps. This extension will last until the earlier of the date on which JSCC registers as a derivatives clearing organization or December 31, 2014, provided that JSCC submits a materially complete application by February 28, 2014. The no-action extension is subject to several conditions. CFTC Press Release.
Relief from Oral Recording Requirements.
On December 18th, the CFTC's Division of Swap Dealer and Intermediary Oversight granted no-action relief for certain branch office operations of CHS Hedging, Inc. and MID-CO Commodities, Inc. with regard to the oral recording requirements of CFTC Regulation 1.35(a)(1). CFTC Letter No. 13-72.
Singapore Exchange Granted DCO Registration.
On December 27th, the CFTC approved Singapore Exchange Derivatives Clearing Limited's application for registration as a derivatives clearing organization. Subject to the terms and conditions of the approval, SGX-DC is authorized to provide clearing services for swaps that SGX-DC currently clears and such other swaps that the CFTC determines SGX-DC is eligible to clear. CFTC Press Release.
Limited Purpose SD Designation.
On December 20th, the CFTC approved a limited purpose swap dealer ("SD") designation to State Street Bank and Trust Company with respect to its activities in foreign exchange products that are swaps. CFTC Press Release.
CFTC Allows Substituted Swap Compliance for Six Jurisdictions.
On December 20th, the CFTC made comparability determinations that will permit substituted compliance with non-U.S. regulatory regimes for certain swap dealers ("SDs") and swap transactions. The CFTC issued comparability determinations for a broad range of entity-level requirements for Australia, Canada, the European Union, Hong Kong, Japan, and Switzerland. The CFTC also approved substituted compliance for a number of key transaction-level requirements for the EU and Japan. CFTC Comparability Press Release.In a related development, the CFTC's Division of Market Oversight provided time-limited relief to CFTC-registered swap dealers and major swap participants ("MSPs") that are non-U.S. persons established under the laws of Australia, Canada, the European Union, Japan or Switzerland, and that are not part of an U.S.-affiliated group, from certain requirements of the swap data reporting rules. CFTC Reporting Relief Press Release. Separately, the CFTC's Division of Swap Dealer and Intermediary Oversight issued a time-limited no- action letter that provides relief to non-U.S. SDs and non-U.S. MSPs established in Australia, Canada, the European Union, Japan, and Switzerland from compliance with certain entity-level internal business conduct standards. The relief will expire on March 3, 2014. CFTC Entity Level Press Release.
CFTC Seeks Comment on Cross Border Staff Advisory.
On January 3rd, the CFTC requested comment on a staff advisory regarding the applicability of certain CFTC regulations to the activity in the United States of registered, non-U.S. swap dealers when entering into swaps with non-U.S. persons. The CFTC seeks comment on all aspects of Staff Advisory 13-69. Comments should be submitted within 60 days after publication in the Federal Register, which is expected shortly. CFTC Press Release.
Reflections on a Chairman.
On January 2nd, DealBook reflected on Gary Gensler's tenure as Chairman of the CFTC and speculated on the agency's future. Reflections.
CFTC and FERC Sign Memoranda of Understanding.
On January 2nd, the Federal Energy Regulatory Commission ("FERC") and the CFTC signed two Memoranda of Understanding to address circumstances of overlapping jurisdiction and to share information in connection with market surveillance and investigations into potential market manipulation, fraud, or abuse. The jurisdiction MOU sets out a process under which the agencies will notify each other of activities that may involve overlapping jurisdiction and coordinate to address the agencies' regulatory concerns. The new information sharing MOU establishes procedures through which the agencies will share information of mutual interest related to their respective market surveillance and investigative responsibilities, while maintaining confidentiality and data protection. The agencies' respective Chairman also agreed to share appropriate data relating to financial markets for gas and electricity on an ongoing basis. CFTC Press Release.
CFTC Signs Information Sharing Agreement with Singapore.
On December 27th, the leaders of the CFTC and the Monetary Authority of Singapore signed a Memorandum of Understanding regarding cooperation and the exchange of information in the supervision and oversight of regulated entities that operate on a cross- border basis in the United States and Singapore. CFTC Press Release.
The Future of Fees.
On December 19th, Bloomberg reported the CFTC will examine the fees managed futures funds charge their clients. Fees.
On December 19th, the White House announced President Obama will nominate Sharon Y. Bowen, a securities lawyer at Latham & Watkins, to the CFTC. White House Statement.
Commissioner Wetjen to Serve as Acting Chairman.
On December 16th, the CFTC announced that Commissioner Mark P. Wetjen has been unanimously elected to serve as Acting Chairman upon the end of Chairman Gary Gensler's service. CFTC Press Release.