Corporate & Commercial

On May 25, the Commodity Futures Trading Commission announced that on June 9, from 10:00 a.m. to 12:00 p.m., the Agricultural Advisory Committee (AAC) would hold a public meeting via teleconference. At this meeting, the AAC will receive a report from the subcommittee that has been evaluating CFTC policy with respect to the implementation of amendments to enumerated agricultural futures contracts with open interest. The meeting also will include a discussion on global agricultural commodity derivatives contracts and other agricultural risk management issues. CFTC Announcement in the Federal Register
On May 26, Commodity Futures Trading Commission’s Market Participants Division (MPD) published updated responses to frequently asked questions regarding CFTC Regulation 4.27 and Form CPO-PQR (FAQs). These FAQs update the 2015 FAQs that addressed issues on Form CPO-PQR from filing mechanics and deadlines to more technical questions. In October 2020, the CFTC adopted a Final Rule amending Form CPO-PQR and CFTC Regulation 4.27, the provision requiring Form CPO-PQR reporting. The updated FAQs reflect that Final Rule’s revisions and supersede the 2015 version. CFTC Press Release
On May 24, the National Futures Association (NFA) issued Notice to Members 1-21-16, announcing the effective date for NFA Member swap dealer and major swap participant dues increases. NFA Bylaw 1301 imposes annual dues on NFA Member swap dealers (SD) and major swap participants (MSP). The current annual dues amounts have remained unchanged, except for a reduction in MSP annual dues, since NFA established its swap regulatory program in 2013. Given the expansion of NFA’s swaps regulatory program over the past eight years and to fund its operations and maintain adequate reserves, NFA’s Board of Directors, on May 20, unanimously…
The Commodity Futures Trading Commission (CFTC) has announced that its Energy and Environmental Markets Advisory Committee (EEMAC) will hold a meeting on June 3 at 9:00 a.m. (ET). At this meeting, the EEMAC will examine how derivatives markets can facilitate the transition to a low-carbon economy, including the status of carbon reduction through cap-and-trade and other carbon trading market mechanisms. The EEMAC will also hear a staff presentation on recent events in the energy markets. The meeting will be held via teleconference in accordance with CFTC’s implementation of social distancing due to COVID-19. The CFTC’s EEMAC meeting on June 3
On May 5, the Commodity Futures Trading Commission (CFTC) announced that it had issued an Order of Registration to Mercado Mexicano de Derivados, S.A. de C.V. (MexDer), a Foreign Board of Trade (FBOT) and subsidiary of the Mexican Stock Exchange located in Mexico City, Mexico. Under the order, MexDer’s members and other US participants will be permitted to enter orders directly into MexDer’s trade matching system. MexDer satisfied CFTC requirements for FBOT registration by demonstrating that: It possesses the attributes of an established, organized exchange; and It is subject to comprehensive oversight by its home country regulator whose supervision is…
On May 3, the Division of Clearing and Risk (DCR) of the Commodity Futures Trading Commission (CFTC) published Staff Letter No. 21-13 (Staff Letter), providing CX Clearinghouse, L.P. (CX) with no-action relief from specified Part 39 regulations applicable to derivatives clearing organizations (DCO). As a registered DCO, CX is subject to Regulation 39.15(d), which requires a DCO to have rules requiring the DCO to promptly transfer all or a portion of a customer’s portfolio of positions and related funds as necessary from the customer’s carrying clearing member to another clearing member, without requiring the close-out and re-booking of the positions…
On April 28, the Division of Data of the Commodity Futures Trading Commission issued a renewal of the temporary no-action relief available to entities (Relief Counterparties) that submit certain swaps for clearing by derivatives clearing organizations that operate pursuant to CFTC exemptive orders or staff no-action letters (Relief DCOs). CFTC Letter No. 21-12 extends relief available to Relief Counterparties from requirements to terminate original “alpha” swaps and report swaps between the Relief Counterparties and the Relief DCOs, as well as for counterparties from reporting certain primary economic terms data fields for swaps intended to be cleared by a Relief DCO,…
On April 22, the Commodity Futures Trading Commission’s Division of Data, Division of Market Oversight and Division of Clearing and Risk (collectively, the Divisions) issued CFTC Letter No. 21-11, which (1) provides no-action relief to KalshiEX LLC (Kalshi), a designated contract market, and LedgerX, LLC (LedgerX), a derivatives clearing organization, from reporting to swap data repositories data for binary option transactions executed on or subject to the rules of Kalshi and cleared by LedgerX; and (2) exempts Kalshi and LedgerX from certain related recordkeeping requirements. This relief is subject to certain conditions, including, but not limited to, the following: all…
On April 8, the Market Participants Division (MPD), Division of Clearing and Risk (DCR), Division of Data (DOD) and Division of Market Oversight (DMO) of the Commodity Futures Trading Commission jointly issued no-action relief, effective immediately, to maintain the regulatory status quo for swap dealers (SD) following the withdrawal of the United Kingdom from the European Union. The no-action letter provides relief to SDs from certain transaction-level requirements for certain swaps between their foreign branches and non-US persons. MPD also provided no-action relief to SDs from the comparability determination requirement by allowing them to utilize existing relief provided in CFTC…
On April 14, the Commodity Futures Trading Commission’s Market Participants Division (MPD) and Division of Market Oversight (DMO) jointly issued CFTC Staff Letter 21-10 to extend, for a limited time, parts of the temporary no-action relief granted in response to the COVID-19 pandemic, which expired on April 15. CFTC Staff Letter No. 21-10 extends until September 30 the following relief: Relief from Introducing Broker (IB) Registration and Location Requirements for Floor Brokers (FBs). MPD is providing a limited continuation of relief from IB registration and location requirements for FBs that normally operate on an exchange’s trading floor and/or other designated…
On April 6, the Commodity Futures Trading Commission’s (CFTC) Office of Customer Education and Outreach (OCEO) issued a Customer Advisory, reminding investors to understand fully how commodity futures markets, physical markets and securities markets differ before engaging in trading activity based on tips or other information communicated through social media. The CFTC noted that posts on online message boards and social media platforms have contributed to increasing volatility in the market. Recently, large numbers of investors have engaged in speculative short-term trading in commodity-backed exchange traded products (ETP), physical commodities, commodity futures and options. Many of these investors held on…
On March 29, the Division of Clearing and Risk (DCR) of the Commodity Futures Trading Commission issued guidance regarding the implementation of revised Regulation 39.13(g)(8)(ii). Regulation 39.13(g)(8)(ii) provides that a derivatives clearing organization (DCO) must require its clearing members to collect from their customers initial margin at a level that is at least equal to the DCO’s own initial margin requirements with respect to each product and portfolio and commensurate with the risk presented by each customer account. The regulation further requires that a DCO must set both (1) a baseline level of initial margin (“clearing initial margin”), which serves…
On March 31, the National Futures Association (NFA) issued Notice I-21-14 advising member firms that are registered with the Commodity Futures Trading Commission as swap dealers (SDs), that NFA rules adopting minimum capital and financial reporting requirements will become effective October 6.   NFA’s Financial Requirements Section 18 requires SDs that are not subject to the rules of a prudential regulator (Covered SDs) to: (1) meet the applicable capital requirements in CFTC Regulation 23.101(a); (2) use internal models to calculate market and credit risk exposure; (3) submit an application to NFA and obtain NFA’s written approval prior to using the…
On March 17, Acting Chairman Rostin Benham of the Commodity Futures Trading Commission announced that he has created a new Climate Risk Unit (CRU) to focus on the role of derivatives in mitigating climate-related risks and helping the economy transition to lower carbon usage. The CRU includes staff from across the CFTC’s various divisions and officers and represents the next step in years of climate leadership for the CFTC (including last year’s publication of the Market Risk Advisory Committee’s Climate-Related Market Risk Subcommittee’s report on Managing Climate Risk in the US Financial System). The CRU will undertake ongoing market and…
On March 5, the National Futures Association (NFA) submitted to the Commodity Futures Trading Commission (CFTC) proposed new Compliance Rule 2-50 and a related Interpretive Notice. Proposed Compliance Rule 2-50 would require each Commodity Pool Operator Member (CPO Member) to provide notice to the NFA by 5:00 p.m. (CT) on the following business day whenever a commodity pool operated by the CPO Member (1) is unable to meet a margin call; (2) is unable to satisfy redemption requests in accordance with its subscription agreements; (3) has halted redemptions, and the halt is not associated with pre-existing gates or lockups, or…