CFTC Developments

CFTC Chairman Announces Resignation; Giancarlo Expected to be Appointed Chairman

Timothy Massad recently announced that he was resigning as Chairman of the CFTC effective on January 20, 2017. Chairman Massad began his tenure at the CFTC in June 2014 succeeding Gary Gensler as Chairman.

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CFTC Re-Proposes Position Limit Rules

The CFTC recently re-proposed position limit rules for a third time. By re-proposing position limits, instead of adopting final rules, the CFTC provides an opportunity for the new Presidential administration to provide input on the rules. Similar to prior versions, the proposed rules would place limits on 25 core physical commodity futures and options contracts and swaps that are "economically equivalent" to such contracts. Read More

CFTC Supplements its Proposal to Regulation AT

In November, the CFTC supplemented its proposed rulemaking for Regulation AT in a continued effort to regulate algorithmic and electronic trading on all U.S. futures exchanges. In its supplement, the CFTC proposes to streamline proposed risk frameworks, modify the proposed definition of an AT Person and limit proposed access to source code. Read More

SEC Developments

Trump Nominates SEC Chairman To Replace White

President-Elect Trump has nominated Jay Clayton, a partner in a large New York law firm, to serve as the next Chairman of the Securities and Exchange Commission. Mr. Clayton's legal practice focuses on mergers and acquisitions, and capital markets offering. Mr. Clayton was one of the attorneys responsible for the 2014 initial public offering of $25 billion by Alibaba Group Holding Limited. Read More

Tenth Circuit Rules SEC Administrative Proceedings Are Unconstitutional, Setting up likely Supreme Court Case

Recently, the Tenth Circuit overturned SEC sanctions against David Bandimere, finding that the Administrative Law Judge (“ALJ”) presiding over Mr. Bandimere's case was an “inferior officer” who should have been appointed, rather than hired, under the appointments clause of the U.S. Constitution. The Tenth Circuit ruling is contrary to a recent decision by the DC Circuit considering ALJ powers, setting up a split which will likely result in a Supreme Court case in the near future to address the controversial issue. Read More


Key Implementation Date of March 1, 2017 approaches for Variation Margin Requirements for Uncleared Swaps

Variation margin rules for “financial end users” are scheduled to go into effect in various jurisdictions, including, the U.S. and the EU, on March 1, 2017. Although margin rules have been in effect for larger financial institutions for some time (in the U.S. since September 2016, and in the EU since November 2016), most of the rules have not yet affected financial end users. However, this will change on March 1, 2017 when financial end users become subject to variation margin rules. Read More

CFTC Approves Proposed Rules Establishing Swap Dealer and Major Swap Participant Capital Requirements

The CFTC approved proposed rules establishing minimum capital requirements for swap dealers and major swap participants as required by the Dodd-Frank Act. Swap dealers and major swap participants that are also FCMs are required to maintain a minimum net capital equal to or greater than the greatest of: (1) $20 million; (2) 8% of the margin required on cleared and uncleared swaps, security-based swaps, futures and foreign futures positions carried for customers and 8% of the margin required on the swap dealer’s or major swap participant’s cleared and uncleared swaps and security-based swap positions; or (3) the amount of capital required by the National Futures Association (“NFA”). Swap dealers that are also FCMs and registered with the SEC as broker-dealers, and approved to use capital models as Alternative Net Capital firms, will be allowed to continue using capital requirements set by the SEC. Read More


Corzine Agrees to Lifetime Ban and to Pay $5 million for his Role in the Collapse of MF Global; O'Brien to Pay Civil Penalties and Subject to Temporary Ban

The CFTC recently entered into a Consent Order in federal court with Jon Corzine ending its civil action which was filed in 2013 following the collapse of MF Global Inc. In the Consent Order, Mr. Corzine agreed to pay a $5 million civil penalty and agreed to a permanent ban from acting as a principal or agent of any FCM, or from registering in any capacity with the CFTC. Read More

Federal Court Orders Non-U.S. resident Navinder Singh Sarao to Pay over $39 Million for Price Manipulation and Spoofing The U.S. District Court for the Northern District of Illinois recently entered an Order against U.K. resident Navinder Singh Sarao requiring him to pay over $25 million as a civil monetary penalty and over $12 million in disgorgement. The Order also imposes permanent trading and registration bans against Mr. Sarao. Read More

Federal Court Orders Oystacher and 3Red to Pay $2.5 Million for Spoofing and Manipulation; No Trading Ban The CFTC has agreed to enter into a Consent Order with Igor Oystacher and his proprietary trading firm, 3Red Trading LLC. Trial had been previously set in the matter for January 17, 2017. Read More

Chicago-Based Advantage Futures LLC and Executives Ordered by CFTC to Pay $1.5 Million for Supervision, Risk Management Failures, and Making Inaccurate Statements In Required Filings The CFTC recently issued an Order against the Chicago-based FCM, Advantage Futures LLC, and its Chief Executive Officer and former Chief Risk Officer. The misconduct includes failure to diligently supervise the handling of certain commodity interest accounts, deficient risk management and credit risk practices, and knowingly making inaccurate statements to the CFTC in violation of Section 6(c)(2) of the Commodity Exchange Act, and CFTC Rules 1.11(c) and (e), 1.73(a) and 166.3. Read More


APRC of IOSCO Issues Comment Letter on CFTC's Cross-Border Swaps Rules The Asia-Pacific Regional Committee ("APRC") of IOSCO recently issued a comment letter on the CFTC's proposed rules governing the cross-border application of its registration threshold for swap dealers and external business conduct standards applicable to swap dealers and major swap participants. In its comments, the APRC noted the detrimental effects of the proposed rules which included: (i) limited benefits and high compliance costs; and (ii) market fragmentation and illiquidity. Read More


Tom Sexton to Succeed Dan Roth as NFA President and CEO

Effective March 1, 2017, Tom Sexton will succeed Dan Roth as NFA President and CEO. Mr. Roth, who announced his retirement in 2016, has served as NFA's President and CEO since 2003. Read More

"Financial Health" Reporting Requirements for CTAs and CPOs Approved by CFTC; To Become Effective for June 2017 Form PQR and PR Filings

The CFTC recently approved NFA's proposed financial reporting requirements for CTAs and CPOs, which will require them to report additional information about their financial condition on a regular basis through Form PQR and PR filings. Amended NFA Rule 2-46 and a new Interpretive Notice, NFA Compliance Rule 2-46: Reporting Financial Information on NFA Forms PQR and PR, will become effective in time for filings required on June 30, 2017. Read More