On June 14, the Commodity Futures Trading Commission (CFTC) announced that it had advised ICE Futures US (IFUS) that IFUS’s amendment to its Block Trade FAQ, which IFUS had previously self-certified to the CFTC pursuant to CFTC Regulation 40.6, would be stayed for a period of 90 days pending further review. The CFTC had determined that the amendment presented novel and complex issues that would require additional time to review and may be inconsistent with the Commodity Exchange Act (Act) and CFTC Regulations.
The amendment to IFUS’s Block Trade FAQ would confirm that, except for an intermediary that enters into a block trade opposite a customer, the parties to a block trade may participate in pre-hedging or anticipatory hedging with respect to positions they believe in good faith will result from the consummation of a block trade. An intermediary that takes the opposite side of its customer’s order may not, prior to the consummation of the block trade, offset the position established by the block trade in any account (1) which is owned or controlled by the intermediary, (2) in which an ownership interest is held by the intermediary, or (3) that is considered a proprietary account of the employer of such intermediary.
Pursuant to CFTC Regulation 40.6(c), the IFUS amendment will become effective upon the expiration of the 90-day review period, unless the CFTC notifies IFUS that the CFTC: (1) has determined to withdraw the stay prior to the end of the 90-day review period; or (2) objects to the proposed certification on the grounds that it is inconsistent with the Act or the CFTC’s regulations.
Public comment on the IFUS amendment must be filed with the CFTC on or before July 14, 2016.
The submission to the CFTC by ICE Futures U.S. is available here.
The CFTC’s notice is available here.