On October 2, 2023, the Commodity Futures Trading Commission (CFTC) published a notice of proposed rulemaking (NPRM), which includes a proposal to amend portions of 17 C.F.R. § 4.7. Under Regulation 4.7, commodity pool operators (CPOs) and commodity trading
Derivatives & Repo Report
A Buy-Side Guide to Regulatory and Transactional Issues Related To Derivatives and Repurchase Agreements
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Rule 4210 Amendments Approved With May ’24 Effective Date
By Perkins Coie
The U.S. Securities and Exchange Commission (SEC) approved FINRA’s proposed amendments (Amendments) to Rule 4210 on July 27, 2023.
In summary, the Amendments amend Rule 4210 in the following respects:
- Eliminate the 2% maintenance margin for nonexempt accounts.
- Permit dealers
…
CFTC Seeks Comment on the Risk Management Program Requirements for Swap Dealers and Futures Commission Merchants With a Focus on Digital Assets
By Perkins Coie
On June 1, 2023, The Commodity Futures Trading Commission (CFTC) published an advanced notice of proposed rulemaking (ANPRM) seeking public comment on potential amendments to the Risk Management Program (RMP) requirements in CFTC Regulations 23.600 and 1.11 (collectively, “RMP Regulations”),…
OFR Identifies Factors That Likely Caused the 2019 Spike in Repo Rates
By Perkins Coie
In September 2019, repurchase agreement (repo) rates spiked, rising as high as 10% intraday. The spike was significant as rates were more than 300 basis points above the federal funds target range–thirty times larger than the preceding week. The United…
Netted Packages Drive Large Trading Volumes in Noncentrally-Cleared, Bilateral Repos
The United States Department of Treasury’s Office of Financial Research (OFR) conducted a pilot survey to determine why primary dealers prefer trading in the noncentrally cleared bilateral repurchase agreement (NCCBR) market segment of the United States repurchase agreement (repo) market.…
CFTC Permits CBOE Clear Digital, LLC to Clear Digital Asset Futures on a Margined Basis
By Perkins Coie
On June 5, 2023, the Commodity Futures Trading Commission (CFTC) issued an order authorizing CBOE Clear Digital, LLC (“CBOE Clear”), a registered derivatives clearing organization (DCO), to clear margined digital asset futures contracts. Concurrent with the June 5th order, CFTC…
The Dangers of Derivatives
A recent settlement order serves as a reminder of how investment strategies using derivatives can produce unanticipated results. In this case, the results led to undisclosed returns of capital and a $6.5 million civil penalty. The case illustrates the importance of…
Short-Term Cash Management Alternatives
In response to recent client questions regarding the various considerations and options for holding short-term funds, we have prepared a reference chart comparing certain key characteristics of demand deposits with government securities, money market funds, and other short-term cash management…
OFR Identifies Five Risk Areas That Financial Regulators Should Watch in 2023
By Perkins Coie
Today, senior financial analysts from the Office of Financial Research (OFR) published a blog post, Five Risk Areas That Financial Regulators Should Watch in 2023.…
Attention CPOs and CTAs: NFA Proposes New Compliance Rule for Members Engaged in Activities Involving Digital Asset Commodities
By Perkins Coie
On February 28, 2023, the National Futures Association (NFA) submitted the proposed adoption of NFA Compliance Rule 2-51 to the Commodity Futures Trading Commission (CFTC). The new compliance rule will apply to NFA members, including commodity pool operators (CPOs) and…