On September 4, 2018, in a speech at the City Guildhall in London, Chairman Giancarlo previewed a new approach to cross-border application of Dodd-Frank swaps provisions, which will be memorialized in a forthcoming white paper.

Chairman Giancarlo began his remarks with a historical overview of cross-border swaps regulation, highlighting post Dodd-Frank reforms. He then summarized the current regulatory regime, emphasizing the substantial progress that has been made in the world’s primary swaps trading jurisdictions to implement commitments made after the 2008 financial crisis at the Pittsburgh G-20 summit.

The Chairman went on to offer a Mea culpa and an apologia, stating that the CFTC’s current approach to applying swaps rules to its cross-border activities has resulted in a number of problems. The Mea culpa was offered for the 2013 cross-border guidance which imposed CFTC transaction rules on swaps traded by U.S. persons even in jurisdictions committed to G-20 swaps reforms. Chairman Giancarlo expressed his view that such an approach “alienated many overseas regulatory counterparts and squandered important American leadership and influence in global reform efforts.” The Chairman allowed that CFTC’s “over-expansive assertion of jurisdiction” may have been understandable in 2013 when other G-20 jurisdictions had not yet implemented swaps reforms. However, today, he views the approach as increasingly out of sync with the world’s major swaps trading regimes, which have since adopted comparable swaps reforms.


Continue Reading Past is Prologue: A New Approach to Cross-Border Application of Dodd-Frank Swaps Provisions

On August 29, 2018, the U.S. Senate confirmed Dawn Stump and Dan Berkovitz as Commissioners of the Commodity Futures Trading Commissioner (“CFTC” or “Commission”). Each has extensive experience in the derivatives markets. Ms. Stump, among other things, has served as Executive Director and Senior Vice President of U.S. Policy for the Futures Industry Association. Mr. Berkovitz, among other things, served as General Counsel of the CFTC from 2009-2013. Ms. Stump and Mr. Berkovitz were sworn in last week, meaning the CFTC now has a full slate of Commissioners for the first time since 2014. Even without a full Commission, the CFTC under Chairman Giancarlo has undertaken various initiatives, including its regulatory simplification program Project KISS (which has led to several proposed and final rules), but now with a full Commission, it is likely that the CFTC will be able to move on several major rulemakings.

Continue Reading With New CFTC Commissioners Onboard, Major CFTC Rulemakings Likely to Follow this Fall

On August 21, 2018, the Commodity Futures Trading Commission (“CFTC”) adopted rule amendments that modify the requirements for Chief Compliance Officers (“CCO”) of swap dealers (“SD”), major swap participants (“MSP”) and futures commission merchants (“FCM”).  SDs and FCMs should review these rules in detail in order to assess the changes they will have to make to their compliance program before the rule is effective. While the amendments do not disturb the CFTC’s substituted compliance determinations, financial institutions taking substituted compliance for Chief Compliance Officers will still need to review and implement changes to their procedures because the rule impacts the annual report these institutions are still required to file with the CFTC.

The amendments clarify and, in most cases, narrow the scope of a CCO’s obligations. For example, the amendments make clear that a CCO’s obligations under CFTC regulations are specific to the registrant’s business as a SD, MSP, or FCM. The amendments also add materiality qualifiers to certain of the obligations of a CCO. For example, 17 C.F.R. § 3.3(d)(2) currently requires that a CCO, in consultation with senior management, take reasonable steps to resolve “any conflicts of interest that may arise.” As amended, the rule will require that the CCO, in consultation with senior management, take reasonable steps to resolve “material conflicts of interest relating to the registrant’s business as a” SD, MSP or FCM. (emphasis added).


Continue Reading CFTC Amends Requirements for Chief Compliance Officers

On 13 February 2018, the Spanish Markets and Competition Commission (“CNMC”) fined four major Spanish banks €91 million for colluding to fix the price of interest-rate derivatives (“IRDs”) attached to syndicated loans above market price.  The decision is an additional indication that syndicated loans are increasingly coming under the scrutiny of competition authorities, after the European Commission last year commissioned a study on competition issues in this market that will be completed by the end of the year 2018.

Continue Reading Is the heat on in the syndicated loans market? Spanish Competition Authority fines banks for price fixing on interest rate derivatives