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The Market Risk Advisory Committee (“MRAC”) of the Commodity Futures Trading Commission (“CFTC”) met last week to discuss reports from its subcommittees on the following issues: Climate-Related Market Risk, CCP Risk and Governance, Market Structure, and Interest Rate Benchmark Reform.  The meeting also featured a panel discussion on diversity and inclusion in the derivatives and related financial markets.  The discussion on Climate-Related Market Risk featured discussion of the Climate-Related Market Risk Subcommittee’s report: Managing Climate Risk in the U.S. Financial System (“Report”), which it previously released on September 9, 2020.  Subcommittee Chair Robert Litterman addressed the MRAC to discuss the Report’s findings and issue a call to action on climate change.
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Continue Reading CFTC MRAC Meeting Features Discussion of Climate Risk

On January 21, 2021, CFTC Chairman Heath Tarbert stepped down as Chairman of the agency and, for the time being, stepped into a Commissioner role.  The CFTC was very active during Chairman Tarbert’s tenure as it implemented his regulatory and enforcement priorities.  In particular, the Division of Enforcement saw the highest volume of enforcement actions in the CFTC’s history.  The CFTC also finalized a number of major regulatory developments in 2020, including its long-awaited rule imposing position limits for derivatives (see our blog post summarizing this final rule).
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Continue Reading CFTC Update: Leadership and Outlook

There has been a flurry of activity at the Commodity Futures Trading Commission (“CFTC”) in recent weeks.  As we reported previously, the CFTC approved three final rules, including the much-anticipated position limits rule, at its October 15 open meeting, and announced significant organizational changes to its operating divisions on November 3.  This post highlights additional significant actions by the CFTC in October and November and previews what is next for the CFTC under a Biden Administration.
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Continue Reading CFTC News Roundup for October and November and a Look Ahead

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.
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Continue Reading CFTC Announces Organizational Changes to Agency Divisions

At an open meeting on October 15, 2020, the Commodity Futures Trading Commission (“CFTC” or the “Commission”) voted to adopt three final rules.  First, the Commission adopted by a 3–2 vote a final rule overhauling its regulatory framework governing speculative position limits on a large variety of commodities.  Second, the Commission unanimously approved amendments to margin requirements for uncleared swaps for swap dealers and major swap participants.  Third, the Commission unanimously voted to finalize amendments to Regulation 3.10(c), which sets forth exemptions from registration for certain foreign intermediaries.
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Continue Reading CFTC Approves Three Final Rules at Open Meeting

During an open meeting on July 22, 2020, the CFTC Commissioners heard a staff presentation on three specific recommendations for changes to the margin requirements for uncleared swaps for swap dealers and major swap participants.  These changes would:

  • Align the timing and methodology for both the material swaps exposure calculations and the post phase‐in compliance periods with the Basel Committee on Banking Supervision and the International Organization of Securities Commissions and other global regulations;
  • Codify relief related to minimum transfer amounts as addressed by CFTC staff letters 17‐12 and 19‐25; and
  • Codify an alternative method for calculating the initial margin that must be collected from the counterparty, in which small swap dealers may rely on the initial margin models of a larger swap dealer counterparty.

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Continue Reading CFTC To Consider Proposals for Refining Uncleared Margin Rules

At open meetings on Wednesday, July 22, and Thursday, July 23, the CFTC approved, by a 3-2 vote, two significant final rules implementing provisions in the Dodd-Frank Act.  The first rule imposes capital requirements on swap dealers (“SDs”) and major swap participants (“MSPs”) that are not subject to supervision by a banking regulator, as well as financial report requirements for all SDs and MSPs.  The second rule addresses the cross-border application of the SD and MSP registration thresholds and establishes a formal process for requesting comparability determinations for such requirements from the CFTC.  Each final rule is summarized below.
Continue Reading CFTC Adopts Final Rules on Capital Requirements and Cross-Border Application of the Registration Thresholds for Swap Dealers and Major Swap Participants

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 May 28, 2020, the Commodity Futures Trading Commission (CFTC) unanimously approved an interim final rule in order to grant an extension of the compliance schedule for uncleared swaps in response to the many operational challenges entities are facing in the wake of the COVID-19 (coronavirus) pandemic. It also approved a proposed rule exempting certain foreign persons from registration as a commodity pool operator (CPO). Recently, the CFTC extended previous waves of no-action relief in response to the coronavirus.
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Continue Reading CFTC Approves Both Interim Final Rule and a Proposed Rule and Extends No-Action Relief in Response to Covid-19

On March 31, 2020, the Commodity Futures Trading Commission’s (CFTC) Division of Swap Dealer and Intermediary Oversight (DSIO) announced the release of a targeted, temporary no-action letter aimed at foreign affiliates of futures commission merchants (FCMs).  This relief is meant to ease regulatory burdens in the face of the global COVID-19 pandemic.  In short, the relief relaxes restrictions on CFTC registrants’ affiliated foreign brokers by allowing them to address the needs of the registrants’ U.S.-based customers without having to register as introducing brokers.   The CFTC has now issued four waves of no-action relief.  It issued the first two waves on March 17, 2020, and a third wave three days later.
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Continue Reading CFTC Announces Fourth Wave of No-Action Relief in Response to COVID-19