New Final Rules

Ownership and control reports. The CFTC published new rules and related forms to enhance its identification of futures and swap market participants. The new rules require the electronic submission of trader identification and market participant data on amended Forms 102 and 40, and on new Form 71. The new and amended forms require the reporting of certain trading accounts active on reporting markets that are designated contract markets or swap execution facilities. The forms collect ownership and control information with respect to both position-based special accounts and trading accounts that meet specified volume-based reporting levels. The rules are effective February 18, 2014. The compliance date is August 15, 2014. (11/18/2013) 78 FR 69177.

DCO rules and international standards. The CFTC published new final rules for systemically important derivatives clearing organizations (SIDCOs). The rules, together with the existing derivatives clearing organizations rules, establish CFTC regulations that are consistent with the Principles for Financial Market Infrastructures (PFMIs) and would allow SIDCOs to continue to be Qualifying Central Counterparties for purposes of international bank capital standards. The final rules include substantive requirements relating to governance, financial resources, system safeguards, special default rules and procedures for uncovered losses or shortfalls, risk management, additional disclosure requirements, efficiency, and recovery and wind-down procedures. (11/15/2013) CFTC press release.

Proposed Rules and Requests for Comment

Exchange for related positions transactions. The CFTC seeks comment on a request from the Chicago Mercantile Exchange Inc., the Board of Trade of the City of Chicago, Inc., New York Mercantile Exchange, Inc., Commodity Exchange, Inc., and the Board of Trade of Kansas City, Missouri, Inc. for approval of amendments to existing Rule 538 of the Exchanges’ rulebooks and the issuance of CME Group Market Regulation Advisory Notice RA1311-5. The amendments would eliminate the use of transitory Exchange for Related Positions transactions (EFRPs) - except for transitory EFRPs in the Exchanges’ FX markets - wherein the execution of an EFRP is contingent upon the execution of another EFRP or related position transaction between the parties and where the transactions result in the offset of the related positions without the incurrence of market risk in the context of the related position transactions. Comments should be submitted by December 6, 2013. (11/6/2013) CFTC press release.

Aggregation of positions. The CFTC issued proposed modifications to its rules for aggregation under the position limits regime for futures and option contracts on nine agricultural commodities. Comments should be submitted by January 14, 2014. (11/5/2013)

Membership in registered futures association. The CFTC proposed amendmentsthat would require all CFTC-registered introducing brokers, commodity pool operators, and commodity trading advisors to become and remain members of at least one registered futures association (RFA). Currently, the National Futures Association is the only RFA. Comments should be submitted by January 7, 2014. (11/5/2013) See also 78 FR 67985 (correcting comment deadline date) (11/13/2013)


SEF guidance. The CFTC’s Division of Market Oversight issued new guidance to swap execution facilities (SEFs) and applicants for registration as a SEF concerning certain Commission regulations. The guidance addresses six areas including a SEF’s use of proprietary data or personal information collected by the SEF from its market participants; consent to the jurisdiction of a SEF; registration requirements under CFTC Regulation 37.3; and member guarantees. In addition, the guidance reiterates the requirements for taking emergency actions and it clarifies certain SEF reporting obligations. (11/15/2013) CFTC press release.

Transaction-level swaps requirements. The CFTC’s Division of Swap Dealer and Intermediary Oversight responded to an inquiry from swap market participants and other interested parties on the applicability of Dodd-Frank Act transaction-level requirements to swaps between non-US swap dealers (SDs) (whether or not an affiliate of a US person) and non-US persons if the swap is arranged, negotiated, or executed by personnel or agents of the non-US SD located in the US. (11/14/2013) CFTC press release. Bloomberg reported the guidance has provoked an immediate negative response not only from industry, but from European regulators. Both believe that the guidance exposes more swaps trades to potential US regulation. (11/18/2013) Response.

Staff guidance on SEF impartial access. The CFTC’s Division of Clearing and Risk, Division of Market Oversight, and the Division of Swap Dealer and Intermediary Oversight issued guidance to swap execution facilities (SEFs) and applicants for registration as a SEF concerning certain CFTC regulations. The guidance addresses certain restrictions related to swaps executed or traded on or subject to the rules of a SEF that are intended to be cleared. In addition, the guidance addresses requirements placed on eligible contract participants for access to a SEF. (11/14/2013) CFTC press release.

Other Developments

Temporary SEF approved. The CFTC approved the application of LatAm SEF, LLC for temporary registration as a swap execution facility. (11/18/2013) CFTC press release.

Position limits debated. discussed the CFTC’s latest proposed position limits, noting the differences between the current rule and those previously proposed, and the concerns that many market participants continue to have. (11/18/2013) Position limits.

Regulatory relief. The CFTC’s Division of Swap Dealer and Intermediary Oversight issued a no-action letter relating to certain duties imposed on swap dealers (SDs) and major swap participants (MSPs) pursuant to the CFTC’s Business Conduct Standards with Counterparties (External BCS), as well as certain documentation requirements imposed on SDs and MSPs pursuant to Commission Regulation 23.504. The relief addresses the regulatory obligations of SDs and MSPs in the context of an “Intended-To-Be-Cleared Swap.” The letter supersedes Letter No. 13-33, and states that no person may rely upon the relief provided in Letter No. 13-33 after November 15, 2013. (11/15/2013) CFTC press release.

CFTC Chairman nominated. President Obama has nominated Treasury Department official Timothy Massad to succeed Gary Gensler as Chairman of the CFTC. (11/12/2013) See, e.g., DealBook