Proposed Rules

Exclusion of Utility Operators

On May 22nd, the Commodity Futures Trading Commission (“CFTC”) published for comment a proposed rule amendment to adjust the de minimis threshold for determining if an entity that enters into swaps with utility special entities must register as a swap dealer. The proposal would amend the CFTC’s swap dealer definition to permit a person dealing in “utility operations-related swaps” with “utility special entities” to exclude those swaps in determining whether that person has exceeded the de minimis threshold specific to dealing with special entities. Under the proposal, however, such swaps would be counted for determining whether the general dealing de minimis threshold applies. Comments should be submitted within 30 days after publication in the Federal Register, which is expected shortly

Regulatory Relief

Reporting Relief for Canadian Banks

On May 30th, the CFTC’s Division of Swap Dealer and Intermediary Oversight issued a time-limited no-action letter that provides relief to each of the five Canadian banks that are registered with the CFTC as swap dealers. The letter provides no-action relief with respect to the requirement that swap dealers furnish risk exposure reports on a quarterly basis, particularly the quarterly risk exposure reports for any fiscal quarter ending on or before July 31, 2014. Accordingly, the five Canadian banks covered by the letter will be required to provide their first quarterly risk reports to the CFTC for the fiscal quarter ending on October 31, 2014.

DCM and SEF Relief

On May 22nd, the CFTC’s Division of Swap Dealer and Intermediary Oversight and Division of Market Oversight issued a no-action letter that provides relief to members of designated contract markets or swap execution facilities that are not registered or required to be registered with the CFTC from the requirement to keep electronic text messages in an identifiable and searchable form.

CFTC Grants CPO Registration Relief Under Streamlined Procedure

On May 16th, the Division of Swap Dealer and Intermediary Oversight granted no-action relief from the requirement to register as a commodity pool operator to a delegating CPO that requested the relief in accordance with the streamlined approach described in CFTC Staff Letter No. 14-69. CFTC Letter No. 14-71.

Other Developments

Acting CFTC Chair Seeks Swaps Reconsideration

On May 29th, the Wall Street Journal reported the remarks of acting CFTC Chairman Mark Wetjen. Wetjen said the agency should reconsider the guidance it issued in late 2013 which required off-shore swaps transactions to comply with U.S. rules if U.S. personnel were involved. Reconsideration.

CFTC Technology Advisory Committee Meeting Agenda

The CFTC published the full agenda for the upcoming CFTC Technology Advisory Committee public meeting which will be held on June 3, 2014. Panel I will focus on high-frequency trading. The witnesses will respond to the charges in Michael Lewis’s book “Flash

Boys” from a derivatives market perspective. There will be an in-depth discussion of data feeds, co-location, direct market access, market maker programs, and order cancellation policies, among other issues. Panel II will focus on the CFTC’s surveillance program. The witnesses will provide their suggestions on how the CFTC should develop a surveillance program for today’s highly automated markets. Panel III will focus on swap execution facilities. The witnesses will discuss any remaining obstacles for the buy side to actively trade on SEFs and offer potential solutions. The panel will also discuss any other SEF issues. CFTC Press Release.

CFTC Roundtable on Position Limits

CFTC staff will hold a public roundtable on June 19, 2014 to discuss position limits for physical commodity derivatives. CFTC Press Release. In order to provide interested parties with an opportunity to comment on the issues to be discussed at that roundtable, the CFTC is opening comment periods for two previous proposals, the Position Limits Proposal and the Aggregation Proposal, for a three- week period starting June 12, 2014 (one week before the roundtable) and ending July 3, 2014 (two weeks following the roundtable).

Trade Incentives

On May 29th, Bloomberg reported the CFTC is asking derivatives traders for information on the discounts they are offered by exchanges. Trading Incentives.

Market Manipulation

On May 23rd, noted the assistance which the information sharing agreement between the CFTC and FERC has had on the latter’s ability to detect market manipulation. Early Detection.

Conflicts of Law

On May 23rd, reported that some swaps dealers are deliberately shielding the true identities of their counterparties in violation of U.S. and European law in order to comply with the privacy rules required by countries such as Switzerland and China. Conflicts.

CFTC Whistleblower Award

On May 20th, the CFTC announced its first award to a whistleblower under the Dodd-Frank Act. The person will receive approximately $240,000. CFTC Press Release.

A Streamlined Summary

On May 20th, Opalesque summarized the CFTC’s May 12, 2014 staff letter which outlined a streamlined approach for consideration of requests for registration no-action relief on an expedited basis from commodity pool operators who delegate certain activities to a registered CPO. Summary.