Corporate & Financial Weekly Digest

Latest from Corporate & Financial Weekly Digest

On February 8, the Market Risk Advisory Committee (MRAC) of the Commodity Futures Trading Commission (CFTC) announced that it will hold a public meeting on February 23. At this meeting, the MRAC will hear reports from the Climate-Related Market Risk, CCP Risk and Governance, Market Structure and Interest Rate Benchmark Reform subcommittees, and will discuss diversity, equity and inclusion in the derivatives industry and financial markets more generally. The meeting will be held via conference call in accordance with CFTC’s implementation of social distancing due to COVID-19. Market Risk Advisory Committee meeting on February 23.…
On February 8, the National Futures Association (NFA) released three Notices to Member that cover educational resources, common regulatory and compliance deficiencies, and recent amendments to NFA Rules and Interpretative notices, each aimed at a different audience, as indicated below. These Notices are intended to assist members in efficiently and effectively meeting their regulatory obligations. Notice I-21-06 is for swap dealers; Notice I-21-07 is for futures commission merchants, forex dealer members, and introducing brokers; and Notice I-21-08 is for commodity pool operators and commodity trading advisors.…
The Federal Trade Commission (FTC) recently announced new filing thresholds that will apply to mergers and acquisitions under the Hart-Scott-Rodino (HSR) Antitrust Improvements Act of 1976, as amended (the Act). These new thresholds will go into effect on March 4. Under the revised notification thresholds, transactions valued above $92 million will require HSR notification when they satisfy other requirements of the Act. This threshold is a decrease from the current threshold of $94 million. The FTC adjusted the filing thresholds for larger transactions as well. The current $188 million threshold will be decreased to $184 million, and the current $940.1…
HSR Early Terminations Suspended — On February 4, the Federal Trade Commission (FTC) announced that it was temporarily suspending the grant of Early Terminations of the 30-day Waiting Period for mergers and acquisitions that require notification under the Hart Scott Rodino Act. This is virtually unprecedented. It is also controversial. The suspension prompted a dissenting statement from two sitting FTC commissioners. The HSR statutory Waiting Period is 30 days from the date the parties to a transaction submit HSR notification reports to the FTC and Department of Justice (DOJ). During the Waiting Period, the parties are legally barred from closing…
On January 19, the Commodity Futures Trading Commission’s Market Participants Division (MPD) and Division of Market Oversight (DMO) issued CFTC Staff Letter No. 21-04 and Letter No. 21-05 (the Staff Letters) to extend, for a limited time, parts of the temporary no-action relief granted in response to the COVID-19 pandemic, which expired on January 15. CFTC Staff Letter No. 21-04 extends until March 31 the following relief initially granted on March 17, 2020: Oral Communications Recordkeeping Relief. MPD is extending relief from CFTC regulations requiring recording of oral communications related to voice trading and other telephonic communications for introducing brokers…
On January 19, the National Futures Association (NFA) issued Notice to Members 1-21-03, announcing that remote online testing is now available for futures industry proficiency. The exams include Series 3, Series 30, Series 31, Series 32 and Series 34, which FINRA administers on behalf of NFA. Tests also may continue to be taken at a local test center. The availability of remote online testing has not affected NFA’s Swaps Proficiency Requirements. Online testing will be delivered and remotely proctored by FINRA’s testing provider, Prometric. Prometric allows candidates to use a personal or firm-provided, webcam-equipped computer to take proficiency exams remotely.…
On January 13, the Commodity Futures Trading Commission’s Market Participants Division determined that the National Futures Association’s (NFA) swap dealer capital model requirements and review program are comparable with the CFTC’s swap dealer capital model requirements and review program. As a result, a capital model approved by NFA will be accepted as an alternative means of compliance with CFTC Regulation 23.102. CFTC Regulation 23.102 permits a swap dealer to apply to the CFTC or to the registered futures association of which it is a member to obtain approval to use internal models for purposes of making model computations for capital…
On January 4, the Commodity Futures Trading Commission’s (CFTC) Market Participants Division (MPD) issued Staff Letter 21-02 providing temporary no-action relief to permit futures commission merchants (FCM) to invest customer funds in investments that have adjustable rates of interest that correlate closely with, or are determined solely by reference to, a benchmark of the Secured Overnight Financing Rate (SOFR), recognizing the increasing use of SOFR as an alternative reference rate to LIBOR in financial markets. CFTC Regulation 1.25 provides that the adjustable rate of interest on permitted investments must be benchmarked to the Federal Funds target or effective rate, the…
The Division of Clearing and Risk (DCR) of the Commodity Futures Trading Commission (CFTC) has issued no-action relief to derivatives clearing organizations (DCOs) from the CFTC’s recently adopted daily reporting requirements. As background, the CFTC amended CFTC Rule 39.19 to require DCOs, among other things, to report daily initial margin, variation margin, cash flow, and position information on an individual customer account basis. The compliance date for these amended reporting requirements would have been January 27. However, DCR has provided no-action relief from the amended reporting requirements until January 27, 2022 to permit additional time for the CFTC and DCOs…
On January 7, the Commodity Futures Trading Commission (CFTC) and the European Securities and Markets Authority (ESMA) announced the signing of an Enhanced Memorandum of Understanding (MOU) regarding cooperation and the exchange of information with respect to certain registered derivatives clearing organizations established in the United States that are central counterparties (CCPs) recognized by ESMA under the European Market Infrastructure Regulation. The MOU expresses the desire of ESMA and the CFTC for enhanced cooperation with respect to the larger US CCPs operating in the European Union with provisions that expand upon the collaboration set out in the 2016 CFTC-ESMA MOU…
On December 17, the Commodity Futures Trading Commission’s innovation office, LabCFTC, released a Digital Assets Primer, which provides the public with updated information about emerging concepts in digital assets. The Digital Assets Primer is intended to build on LabCFTC’s 2017 Primer on Virtual Currencies, which focused on virtual currencies, such as bitcoin. Topics covered by the Digital Assets Primer include: (1) smart contracts; (2) digitized representations of value or ownership; (3) the governance of digital assets; and (4) the appropriate role of regulatory authorities, including the CFTC. The Digital Assets Primer is available here. The 2017 Primer on Virtual…
On December 17, the Commodity Futures Trading Commission’s Division of Market Oversight issued CFTC Letter No. 20-45, which extends relief from the trade execution requirement for certain inter-affiliate transactions provided under CFTC Letter No. 17-67 (available here) and prior staff letters. CFTC Letter No. 17-67 provides relief from the trade execution requirement under CFTC Regulation 50.52(a) with regard to swaps that are entered into by eligible affiliate counterparties and cleared, regardless of the affiliates’ ability to claim the inter-affiliate clearing exemption under CFTC Regulation 50.52(b). The no-action relief was set to expire on December 31. On December 7, the…
On December 8, the Commodity Futures Trading Commission (CFTC) approved a final rule amending CFTC Regulation Part 38 to address the risk of a designated contract market’s (DCM) trading platform experiencing a market disruption due to electronic trading. The final rule sets forth three principles applicable to DCMs concerning: the implementation of exchange rules applicable to market participants to prevent, detect and mitigate market disruptions and system anomalies; the implementation of exchange-based, pre-trade risk controls for electronic orders; and the prompt notification of CFTC staff by DCMs of any significant market disruptions on their electronic trading platform. The final rule…
On December 3, the Commodity Futures Trading Commission’s (CFTC) Division of Clearing and Risk (DCR) and Division of Market Oversight (DMO, and collectively, the Divisions) issued CFTC Letter No. 20-43, an interpretation regarding Sections 2(h)(1) and 2(h)(8) of the Commodity Exchange Act (CEA) and the CFTC regulations thereunder. Section 2(h)(1)(A) of the CEA prohibits a person from engaging in a swap that is required to be cleared unless that person submits such swap for clearing to a derivatives clearing organization (DCO) that is either registered or exempt from registration under the CEA. CFTC Regulation 50.4 enumerates classes of swaps that…
On December 4, the Commodity Futures Trading Commission’s (CFTC) Market Participants Division (MPD) and Division of Clearing and Risk (DCR) jointly issued no-action relief, effective immediately, to provide greater certainty to the global marketplace in connection with the withdrawal of the United Kingdom from the European Union. The relief permits market participants to transfer certain swaps to an affiliate without such swaps becoming subject to the CFTC’s swap clearing requirement or uncleared swap margin requirement. The relief applies to transfers that occur up to one year following the conclusion of the transition period. The press release is available here.…
On December 8, the Commodity Futures Trading Commission (CFTC) approved a final rule making technical amendments to CFTC regulations to align with recent organizational changes, remove unnecessary language, and correct inaccurate text and other typographical errors. The amendments are immediately effective upon publication in the Federal Register, unless otherwise noted.  The press release is available here.…