Corporate & Financial Weekly Digest

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On May 19, the Commodity Futures Trading Commission’s Global Markets Advisory Committee approved a report that contains several recommendations for action by the CFTC with respect to the implementation of its initial margin (IM) rules for uncleared swaps. The recommendations are focused on the unique challenges faced by small end users of swaps and entities that engage in swap activity through separate managed accounts (SMAs). The report recommends that the CFTC take all of the following actions: issue Interpretive Guidance to confirm that a swap dealer can continue to trade with an SMA client in the case of an inadvertent…
On May 20, the Commodity Futures Trading Commission’s Division of Enforcement (Division) issued new guidance (Guidance) outlining factors the Division will consider in recommending civil monetary penalties (CMPs) imposed by the CFTC in enforcement actions. This is the first publicly issued Division CMP guidance since the CFTC published its penalty guidelines in 1994. The Guidance is designed to provide market participants with greater transparency as to Division staff’s decision-making criteria regarding CMPs. The Guidance identifies three factors that will inform the Division’s recommendations regarding an appropriate penalty: (1) the “gravity of the violation” (including, but not limited to, facts surrounding…
On May 19, the Commodity Futures Trading Commission published in the Federal Register a request for public comment on the CFTC’s draft 2020-2024 Strategic Plan (Strategic Plan). The current draft of the Strategic Plan includes a discussion of the CFTC’s mission, vision, core values, strategic goals and strategic objectives. The proposed strategic goals include: strengthening the resilience and integrity of the derivatives markets while fostering their vibrancy; regulating the derivatives markets to promote the interests of all Americans; encouraging innovation and enhancing the regulatory experience for market participants at home and abroad; being tough on those who break the rules;…
The International Swaps and Derivatives Association, Inc. (ISDA) has launched a new webpage containing information about interest rate benchmark reform and the transition away from the use of interbank offered rates (IBORs, including LIBOR) as floating rates in swap transactions. The page and subsequent materials are available to everyone, not just ISDA members. The page has seven sections: Background Benchmark Fallbacks/Consultations Bloomberg: Fallback Spread Vendor Other Related ISDA Benchmark Initiatives Relevant Research/Reading Material Press Releases/Latest News/Speeches/Presentations Market Education Calls/Webinars/Conferences The ISDA webpage on benchmark reform is available here.…
To address the latest COVID-19 developments and the impact on the derivatives industry, National Futures Association (NFA) is hosting a webinar focused on NFA’s current operations, regulatory approach and relief issued. The webinar is scheduled for May 27, 2020 at 9:30 a.m. CT. The webinar is free, but registration is required. The webinar’s registration page is available here.…
The Commodity Futures Trading Commission (CFTC) has announced that its Global Markets Advisory Committee (GMAC) will hold a meeting on May 19 at 10:00 a.m. (ET). At this meeting, the GMAC will hear presentations from (1) CFTC’s Office of International Affairs Director, Suyash Paliwal, on international coordination efforts in the time of COVID-19, and (2) the GMAC Subcommittee on Margin Requirements for Non-Cleared Swaps on its report and recommendations regarding the implementation of initial margin requirements for non-cleared swaps. The meeting will be held via conference call in accordance with CFTC’s implementation of social distancing due to COVID-19. More information…
On April 22, the Commodity Futures Trading Commission (CFTC) published a no-action letter providing guidance for futures commission merchants (FCMs) and introducing brokers (IBs) in connection with calculating the FCM’s or IB’s net capital under CFTC Regulation 1.17. Pursuant to the no-action letter, the CFTC will not bring an enforcement action against an FCM or IB who, subject to certain requirements, adds back to the FCM’s or IB’s capital the portion of any monies received, but is not required to return, pursuant to the Paycheck Protection Program (PPP). Likewise, an FCM or IB that also is a “small firm” member…
On April 9, the Commodity Futures Trading Commission (CFTC) extended five currently open comment periods in light of COVID-19. The comment periods for the following rulemakings have been extended until May 22, 2020, unless otherwise noted: Swap Execution Facility Requirements and Real-Time Reporting Requirements; Certain Swap Data Repository and Data Reporting Requirements; Amendments to the Real-Time Public Reporting Requirements; Amendments to the Swap Data Recordkeeping and Reporting Requirements; and Position Limits for Derivatives (extended until May 15, 2020). The CFTC approved the extension by a 3-2 vote over the dissents of Commissioner Rostin Behnam and Commissioner Dan M. Berkowitz, both…
On Friday, April 3, the Basel Committee on Banking Supervision (BCBS) and the International Organization of Securities Commissions (IOSCO) announced another delay in the implementation of the global implementation of mandatory initial margin for uncleared swaps. The initial margin compliance date for Phase 5 will now be September 1, 2021. The compliance date for Phase 6 will be September 1, 2022. (Phase 6 was created by a BCBS-IOSCO announcement last year). The announcement includes the following statement: “With this extension, the final implementation phase will take place on 1 September 2022, at which point covered entities with an aggregate average…
The Commodity Futures Trading Commission (CFTC) will hold an open meeting on April 14 from 10:00 a.m. to 1:00 p.m. (ET) to consider several proposed amendments to its rules, including: (1) proposed amendments to the CFTC’s Part 190 bankruptcy regulations; (2) compliance requirements for commodity pool operators on Form CPO-PQR; and (3) proposed amendments to the CFTC’s Part 50 rules addressing clearing requirements for central banks, sovereigns, international financial institutions, bank holding companies and community development financial institutions. The CFTC will also consider adopting final rule amendments relating to: (1) Part 23 of its rules governing margin requirements for the…