The Australia and New Zealand Banking Group Ltd., an Australian-based Commodity Futures Trading Commission-registered swap dealer, was charged by the Commission with violating regulatory requirements related to the reporting of large swap positions involving physical commodities. According to the CFTC, from at least March 1, 2013, to November 20, 2014, ANZ failed on certain days to submit any reports of its large positions, while at other times it “routinely” submitted required reports that included errors. Under applicable law and CFTC regulations, swap dealers and other reporting entities are required to file with the Commission on a daily basis reports of swap positions involving certain physical commodities in excess of certain minimum levels in particular formats. Among other errors, ANZ, prior to September 2013, failed to identify any relevant commodity; throughout the period, populated the field “Commodity Reference Price” in a manner different than required by the Commission; and throughout the period, reported positions in units of the relevant commodity rather than the futures equivalent level. ANZ agreed to pay a US $150,00 fine to resolve the CFTC’s complaint.
Compliance Weeds: The CFTC maintains an extensive large trader reporting program that must be strictly complied with by reporting entities. For futures and related options, large trader data must be provided to the Commission by futures commission merchants and foreign brokers. Generally, if at the end of a day a reporting firm has a customer with a position at or exceeding the Commission’s reporting level in any single futures or options expiration month, the firm must report all of the customer’s positions in futures and options in that commodity no matter the size positions in the other months. (Click here for current CFTC reporting levels for futures.) Similarly, clearing members and swap dealers are required to file daily with the CFTC large trader reports for physical commodity swaps and swaptions when their positions exceed the equivalent of 50 related futures contracts (such swaps and swaptions must relate to certain covered agricultural and exempt futures contracts; click here to access a list of relevant covered contracts). The report must include certain required information in a format mandated by the Commission – including converting swap positions to futures contracts equivalent levels. (Click here to access the helpful CFTC publication “Large Trader Reporting for Physical Commodity Swaps: Division of Market Oversight Guidebook for Part 20 Reports” published June 22, 2015.)