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The Commodity Futures Trading Commission (CFTC) recently approved two applications from LedgerX – a platform for trading and clearing Bitcoin options – to become registered as a swap execution facility (SEF) and derivatives clearing organization (DCO). These approvals make LedgerX the first DCO and the second SEF approved to facilitate digital currency-related derivatives activity (another SEF, TeraExchange, lists cash-settled forward contracts on Bitcoin). LedgerX received temporary registration as a SEF nearly two years ago.…
Last week the Trump Administration continued its focus on deregulation by issuing two Executive Orders, one requiring executive agencies to cut two regulations for every new one they promulgate, and a second one setting forth principles for executive agencies to follow in promulgating financial regulations. The first Order, entitled “Presidential Executive Order on Reducing Regulation and Controlling Regulatory Costs,” requires that, unless otherwise prohibited by law, if an executive agency or department proposes…
Today, in a move on its long-pending proposals, the CFTC: (1) re-proposed its new speculative position limits rules (the “Re-Proposal”), which would impose federal limits on 25 physical commodity futures contracts and their “economically equivalent” futures, options, and swaps; and (2) separately issued final rules relating to position aggregation requirements (the “Final Aggregation Rules”). We will cover the details of the Re-Proposal and the Final Aggregation Rules in the days ahead.…
The Federal Reserve Board (FRB) recently proposed new restrictions on the ability of a financial holding company (FHC) to engage in physical commodity activities. The complex proposal includes (i) heightened capital requirements for certain physical commodity activities, (ii) changes to the maximum amount of specified physical commodities FHCs can hold, (iii) clarification of restrictions on certain physical commodity activities, (iv) elimination of the authority to engage in particular physical commodity-related activities, and (v) termination of…
CFTC Chairman Massad today announced that he will recommend a one-year extension of the date on which the swap dealer de minimis threshold will drop from $8 billion to $3 billion.  Chairman Massad will recommend the Commission take this action through Commission order.  If adopted, the Commission order would permit market participants to calculate their swap dealing activity based on the lower de minimis threshold beginning on January 1, 2018, as opposed to January 1,…
The United States Securities and Exchange Commission (SEC) recently finalized a regulation pursuant to Title VII of the Dodd-Frank Act regarding the requirement for security-based swap data repositories (SBSDRs) to make security-based swap data available to other domestic and foreign regulators. Pursuant to the final regulation, SBSDRs must make available security-based swap data, including individual counterparty trade and position data, to several US financial regulators and the Federal Reserve banks, the US Department of Justice,…
On September 8, 2016, the CFTC held an open meeting where the Commissioners: (i) unanimously approved two final rules regarding system safeguards and testing requirements for derivatives trading platforms, clearinghouses, and data repositories, and (ii) approved, over Commissioner Bowen’s dissent, a “comparability determination” for purposes of substituted compliance with Japan’s regulations regarding margin requirements for uncleared swaps. Also noteworthy, though, were the closing remarks made by Chairman Timothy Massad, where he listed his priorities for…
In interim final rulemakings (“IFRs”) issued over the summer, federal financial regulators (including the SEC, CFTC, FERC, OCC, FDIC, CFPB, and the Federal Reserve), at Congress’ direction, systematically increased the maximum civil monetary penalty amounts (“CMPs”) that can be imposed for violations of the statutes they administer and enforce.  Although these adjustments were made in order to account for inflation, in some cases they have yielded significantly higher potential penalties.  The agencies, however, have not…
CFTC Staff has published a Final Report on the Swap Dealer De Minimis Exception (Final Report) addressing the level of swap dealing activity that is considered “de minimis” and therefore does not require an entity to register as a swap dealer with the CFTC.  The Final Report provides updated data analysis, and summarizes public comments submitted on staff’s Preliminary Report published in late 2015 (which we discussed in a prior blog post). The de…
The CFTC has issued a supplemental proposed rulemaking (the “2016 Supplement”) that would give futures exchanges (“Exchanges”) greater authority over exemptions if the CFTC finalizes its long-pending proposed new speculative position limits that it published in December 2013 (the “Limits Proposal”).  In an effort to be responsive to severe criticism of the Limits Proposal, particularly by commercial users of derivatives in the energy and agricultural sectors, the 2016 Supplement, if finalized, would provide a process…