On November 2, 2020, the U.S. Commodity Futures Trading Commission (CFTC) issued a press release announcing organizational changes to several areas of the agency’s operating divisions. According to CFTC Chairman Heath P. Tarbert, these changes are intended to better align the agency’s structure with its strategic objectives.

Continue Reading CFTC Announces Organizational Changes to Agency Divisions

On Friday 14 August, the Court of Appeal handed down judgment in the FX dispute CFH Clearing Limited v Merrill Lynch International [2020] EWCA Civ 1064.  This appellate success was a comprehensive victory for the clear wording of standard ISDA documentation over creative legal arguments.

Despite, or even because of, the one-sided result, the judgment contains important lessons for market participants on the approach the English Courts will take to future interpretation issues in ISDA disputes.  
Continue Reading English Court of Appeal Upholds Merrill Lynch’s Reliance on ISDA Standard Terms

On May 20th the U.S. Commodities Futures Trading Commission (the “CFTC”) Division of Enforcement (the “Division”) announced new guidance for Division staff to consider when recommending civil monetary penalties in an enforcement action (the “CMP Guidance” or the “Guidance”).  As a former CFTC regulator who brought dozens of cases over a 13 year career in

On April 10, 2020 the Commodity Futures Trading Commission ( the “CFTC” or the “Commission”) extended certain currently-open comment periods for several pending proposed rules in light of the COVID-19 pandemic.  The Commission completed voting to adopt the relatively short extensions on Thursday, April 9.  The measure passed by a final tally of 3-2, with both the Democratic commissioners dissenting on the basis that the extensions were too short, making them meaningless.  Of the extensions, Chairman Heath P. Tarbert said “[t]hese extensions reflect my commitment to providing market participants with additional flexibility during this pandemic.  Commenters on recently proposed rules will now have at least 90 days, and in many cases more, to provide feedback that we value tremendously as we seek to finalize rules.”

After consultation with market participants, in order to identify relief and assistance that would support orderly and liquid markets, the Division of Market Oversight (“DMO”) sought to extend the comment period for the five proposed rules discussed below.  The extensions are applicable to rules proposed by DMO with comment periods that began in January and February of 2020.  Extensions were approved to allow the comment periods for all the proposed rules relating to swap data reporting to terminate on the same date – May 22, 2020.


Continue Reading CFTC Extends Certain Comment Periods for Pending Proposed Rules in Response to Covid-19

On February 12, 2020, the Board of the International Organization of Securities Commissions (“IOSCO”) released a report titled Issues, Risks and Regulatory Considerations Relating to Crypto-Asset Trading Platforms.  The report describes the risks associated with crypto-asset trading platforms (“CTPs”) and sets forth key considerations for regulators in addressing such risks.  IOSCO is an association of primary securities and futures regulators from over 100 different nations.  The U.S. Securities and Exchange Commission and the Commodity Futures Trading Commission are ordinary and associate members, respectively, of IOSCO.

To prepare this report, IOSCO first issued a consultation report on May 28, 2019, which included a survey of the approaches member jurisdictions were currently undertaking or considering with respect to CTPs.  The final report draws upon the consultation report and includes a summary of the survey’s findings.

The report notes that many of the issues and risks associated with trading on CTPs are similar to the issues and risks associated with trading traditional securities or financial instruments on trading venues.  Consequently, IOSCO states that the three core objectives of securities regulation are relevant in the crypto-asset context.  The three core objectives are: (1) protection of investors; (2) ensuring that markets are fair, efficient and transparent; and (3) reduction of systemic risk.  Supporting these objectives are principles that foster efficient markets, including: effective price discovery, appropriate transparency, market integrity, and fair access.  The final report, to assist regulators in evaluating CTPs under their purview, sets forth the following list of key considerations:


Continue Reading IOSCO Issues Report on Risks Relating to Crypto-Asset Trading Platforms

On February 12, 2019, for the first time in its history, the Commodity Futures Trading Commission (“CFTC”) announced the release of 2019 examination priorities for each of its regulatory Divisions.  CFTC Chairman J. Christopher Giancarlo stated that “[t]his first-ever publication of division examination priorities is in line with Project KISS and other agency initiatives to improve the relationship between the agency and the entities it regulates, while promoting a culture of compliance at our registrants.”  Other regulatory agencies, such as the U.S. Securities and Exchange Commission (“SEC”) and the Financial Industry Regulatory Authority (“FINRA”), traditionally publish annual examination priorities.  The CFTC 2019 examination priorities focus on ensuring that CFTC registrants have sufficient compliance mechanisms in place to effectively self-regulate in accordance with the CFTC’s regulatory priorities.  Registrants should consider this announcement as signaling an increase in the CFTC’s attention to its supervisory efforts and as a potential precursor to increased enforcement activity.

Continue Reading CFTC Announces 2019 Examination Priorities for the First Time

The past few weeks have been chaotic for both Brexit negotiations and U.K. politics overall. On January 15, 2019, British Prime Minister Theresa May’s Brexit plan succumbed to historic defeat in Parliament. Brexit watchers expected a defeat but the record margin of 432 votes against, and 202 votes for, was still shocking. On January 16, 2019, the Prime Minister narrowly survived a vote of no-confidence in her government. On Monday, she submitted to Parliament a Plan B for Brexit with a vote on such plan scheduled for tomorrow, January 29th. Against this backdrop of upheaval and uncertainty, derivatives markets must still function and, over the past few months, the European Commission ( the “EC” or the “Commission”) has taken steps to mitigate the negative impacts of a possible no-deal Brexit. Nevertheless, issues and market concerns remain.

No Deal Brexit and the Limits of EU Equivalence

If anything, recent activities in the U.K. have heightened expectations of a no-deal Brexit. For months now, investors and advisors, particularly those in the U.K., have been flagging concerns about the impact of Brexit on the derivatives industry, including fragmented markets and liquidity shortfalls.

Facing such risks to the multi-trillion-dollar derivatives market and attendant long-term impacts on its economy, the EC announced on December 12 that it would adopt an equivalence decision to address some, but not all, of the issues associated with a no-deal Brexit. The EC stated it will issue temporary licenses to clearinghouses, recognizing U.K. laws as “equivalent” to EU standards, to ensure that derivatives markets will continue to function with minimal disruption.


Continue Reading The Latest Brexit Chaos: What Does it Mean for Derivatives Markets?

The CFTC’s LabCFTC recently released “A Primer on Smart Contracts” as part of LabCFTC’s initiative to engage with stakeholders on FinTech topics. The primer explains smart contracts, and explores their potential benefits — with a particular focus on the financial sector — and challenges. The CFTC has an interest in smart contracts because,

For several years Swap Dealers registered with the Commodity Futures Trading Commission (“CFTC”) have been awaiting action by the Securities and Exchange Commission (“SEC”) related to security-based swap dealers.  While the wait is by no means over, on October 11, 2018 the SEC voted 4 to 1 to reopen the comment period for proposed rules

On October 1, 2018, Chairman Giancarlo of the Commodity Futures Trading Commission (“CFTC” or “Commission”) released a white paper titled “Cross-Border Swaps Regulation Version 2.0: A Risk-Based Approach with Deference to Comparable Non-U.S. Regulation.” The Chairman previewed both his views on cross-border swaps reform and the paper in speeches delivered in London, Tokyo and Singapore