CFTC Proposal for Enhanced FCM and DCO Protections

On October 23, the CFTC proposed new regulations and amendments to existing regulations to enhance protections for customers and to strengthen safeguards for the holding of money, securities, and other property deposited by customers with futures commission merchants (FCMs) and derivatives clearing organizations (DCOs).  The proposal would:

  1. require FCMs to hold sufficient funds in secured accounts to meet their total obligations to U.S.- and

foreign-domiciled customers trading on foreign contract markets;

  1. prohibit FCMs from holding certain positions in Part 30 secured accounts;
  2. require FCMs to hold sufficient proprietary funds in segregated accounts;
  3. require FCMs to maintain certain written policies and procedures;
  4. require certain daily reporting;
  5. require FCMs and DCOs to provide the CFTC and designated SROs with read-only direct electronic access to bank and custodial accounts holding customer funds;
  6. require FCMs to adopt policies and procedures on supervision and risk management of customer funds;
  7. require FCMs to provide potential customers with additional disclosures addressing firm specific risks; and
  8. enhance standards for SROs’ examination of member FCMs. 

Comments may be submitted within 60 days after publication in the Federal Register.  CFTC Release.

CFTC Final Interpretive Guidance on Foreign Regulators’ Indemnification and Confidentiality Obligations

On October 22, the CFTC issued final interpretive guidance to, under certain circumstances, exempt foreign regulators from the indemnification and confidentiality provisions in the Dodd-Frank Act. This exemption applies generally to data that is reported pursuant to foreign law and if the swap data repository is registered, recognized, or otherwise authorized by the country’s law and regulation. CFTC Release.

SEC Standards for Risk Management and Operations of Clearing Agencies

On October 22, the SEC adopted rule 17Ad-22 to establish standards for how registered clearing agencies should manage their risks and run their operations. Among other things, the rule sets standards for measurement and management of credit exposures, margin requirements, financial resources, and margin model valuation. The rule will be effective 60 days after publication in the Federal Register. SEC Release. Final Rule.

Reserve Bank of Australia RMBS Disclosure Criteria

On October 22, the Reserve Bank of Australia introduced new criteria for the eligibility of RMBS in its operations, which will require RMBS issuers to provide detailed information on reporting templates regarding:

  1. the transaction;
  2. the securities;
  3. the pool of underlying assets; and
  4. anonymous loan-level data.

Comments on the reporting templates are due by December 28.  RBA ReleaseReporting Templates.