Corporate & Financial Weekly Digest

Corporate & Financial Weekly Digest

Category Archives: Derivatives

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CFTC’s Division of Swap Dealer and Intermediary Oversight Extends Exemptive Relief From CFTC Regulations 4.7 and 4.2 Requirement to Prepare Financial Statements in Accordance With US GAAP

Posted in CFTC, Derivatives
On March 30, the Commodity Futures Trading Commission’s Division of Swap Dealer and Intermediary Oversight (DSIO) issued Letter 18-09, which granted exemptive relief to a commodity pool operator (CPO) of a foreign “Master Fund” and a US “Feeder Fund.” CFTC rules generally require that the financial statements a CPO is required to provide US pool… Continue Reading

CFTC Seeks Market Risk Advisory Committee Membership Nominations and Public Comment on Committee Priorities

Posted in CFTC, Derivatives
On March 15, the Commodity Futures Trading Commission published in the Federal Register a request for nominees for the membership positions on the Market Risk Advisory Committee (MRAC). MRAC is a discretionary advisory committee that conducts public meetings and submits reports and recommendations to the CFTC on matters including systemic risk and changes in the… Continue Reading

CFTC Extends Time-Limited No-Action Relief for Entities Submitting Swaps for Clearing With Certain DCOs

Posted in CFTC, Derivatives
On February 20, the Commodity Futures Trading Commission’s Division of Market Oversight (DMO) published Staff Letter 18-03, which extends the time-limited no-action relief provided in Staff Letter 16-85 for entities submitting swaps for clearing by derivatives clearing organizations (DCOs) operating under (1) exemptive orders issued by the CFTC; or (2) no-action relief granted by the… Continue Reading

Supreme Court Limits Scope of Dodd-Frank Whistleblower Protections

Posted in Derivatives, Dodd-Frank Developments, Litigation, SEC/Corporate
On February 21, the US Supreme Court decided Digital Realty Trust, Inc. v. Somers (583 U.S. ____ (2018)), which resolved a circuit split related to whether the anti-retaliation provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act, 124 Stat. 1376 (Dodd-Frank) extend to individuals who have not reported a securities law violation to… Continue Reading

Conforming Amendments Proposed for Bank Swap Margin Rules

Posted in Banking, CFTC, Derivatives, Dodd-Frank Developments
On February 5, the Prudential Regulators—the five federal banking regulators for swap dealers that are banks—proposed technical amendments to their margin rules for uncleared swaps. The amendments aim to harmonize the definition of Eligible Master Netting Agreement (EMNA) in the margin rules with recent changes made to the definition of “Qualifying Master Netting Agreement” (QMNA)… Continue Reading

FCA Revises List of MiFID II Position Limits

Posted in Derivatives, Financial Markets, UK Developments
The UK Financial Conduct Authority (FCA) has reviewed the bespoke position limits set for a number of commodity derivatives traded on UK venues. Following its review and as a result of strong growth in some commodity derivative contracts, the FCA has increased the limits of approximately 20 commodity derivative contracts as of February 8.… Continue Reading

CFTC’s Market Risk Advisory Committee Releases Agenda for Upcoming Public Meeting

Posted in CFTC, Derivatives
The Commodity Futures Trading Commission has released the agenda for the Market Risk Advisory Committee (MRAC) public meeting that will be held on January 31. The public meeting will feature four different panels, in addition to opening remarks from Rostin Behnam, MRAC Sponsor and Commissioner; J. Christopher Giancarlo, CFTC Chairman; and Brian D. Quintenz, a… Continue Reading

ESAs Publish Final Report Aiming to Align Variation Margin Rules for FX Forwards With Supervisory Guidance in Other Key Jurisdictions

Posted in Derivatives, EU Developments
On December 18, 2017, the European Supervisory Authorities (ESAs) published a final report aiming to align the treatment of variation margin for physically settled foreign exchange forward transactions (FX Forwards) with supervisory guidance applicable in other key jurisdictions. The amended draft variation margin regulatory technical standards on risk mitigation techniques for over-the-counter (OTC) derivatives not… Continue Reading

CFTC Approves Amendments to Commission Regulations Under Parts 3 and 9

Posted in CFTC, Derivatives
On January 9, the Commodity Futures Trading Commission announced it had unanimously approved final rules that update Parts 3 (Registration) and 9 (Review of Exchange Disciplinary, Access Denial or Other Adverse Actions). These updates integrate existing advisory guidance, incorporate swap execution facilities, and update provisions currently applicable to designated contract markets. The CFTC also approved… Continue Reading

CFTC Staff Issues No-Action Relief to Futures Commission Merchants and Introducing Brokers Regarding Capital Treatment of Deferred Tax Liabilities From Changes in Accounting Principles

Posted in CFTC, Derivatives
On January 5, the Commodity Futures Trading Commission’s Division of Swap Dealer and Intermediary Oversight issued a no-action letter authorizing registered futures commission merchants and introducing brokers to exclude deferred tax liabilities that are directly related to the capitalized costs of certain non-allowable assets when computing their adjusted net capital under Regulation 1.17. The tax… Continue Reading

NFA Issues Notice of Additional Reporting Requirements for CPOs and CTAs That Trade Virtual Currency Products and IBs that Solicit or Accept Orders in Virtual Currency Products

Posted in CFTC, Derivatives
On December 14, 2017, the National Futures Association (NFA) issued Notices regarding commodity pool operators (CPOs), commodity trading advisors (CTAs) and introducing brokers (IBs), outlining new reporting requirements for CPOs, CTAs and IBs that deal in virtual currencies.… Continue Reading

ISDA Announces Plans for French and Irish Law Governed Master Agreements After Brexit

Posted in Brexit, Derivatives, EU Developments, Financial Markets
On January 8, the International Swaps and Derivatives Association, Inc. (ISDA) published a blog post providing insight into how it is preparing for the UK’s departure from the European Union and how this will impact the use of the industry-standard ISDA Master Agreement.… Continue Reading

CFTC Approves Exemption From SEF Registration Requirements for Multilateral Trading Facilities and Organized Trading Facilities Authorized Within the EU

Posted in CFTC, Derivatives
On December 8, in response to a request by the European Commission (EC), the Commodity Futures Trading Commission issued an order exempting certain multilateral trading facilities (MTFs) and organized trading facilities (OTFs) authorized within the European Union (EU) from the requirement to register with the CFTC as swap execution facilities (SEFs).… Continue Reading

CFTC Staff Issues Interpretive Guidance Clarifying Commodity Trading Advisor Registration Requirements Resulting from the European Union’s MiFID II Research Compensation Provisions for Investment Managers

Posted in CFTC, Derivatives
On December 11, at the request of the Futures Industry Association (FIA), the Commodity Futures Trading Commission’s Division of Swap Dealer and Intermediary Oversight (Division) issued an interpretive letter regarding the “solely incidental” exclusion from registration as a commodity trading advisor (CTA). Under the relevant provisions of the Commodity Exchange Act and CFTC rules, a… Continue Reading

FCA Publishes Issue 55 of Market Watch Newsletter

Posted in Derivatives, Financial Markets, UK Developments
On December 12, the UK Financial Conduct Authority (FCA) published issue 55 of Market Watch, its newsletter on market conduct and transaction reporting issues. Similar to Issue 54 of Market Watch (reported in the Corporate & Financial Weekly Digest edition of November 10, 2017), Issue 55 contains articles of relevance to the implementation of the… Continue Reading

UK FCA, Dutch AFM and French AMF Publish Position Limits for Commodity Derivative Contracts

Posted in Derivatives, Financial Markets, UK Developments
Under the revised Markets in Financial Instruments Directive (MiFID II), limits are required to be established on the size of a net position a person can hold (at all times) in commodity derivatives traded on EU/European Economic Area (EEA) trading venues and economically equivalent over-the-counter contracts. On December 7, the UK Financial Conduct Authority (FCA)… Continue Reading

EU and CFTC Implement Mutual Recognition of Derivatives Trading Venues

Posted in CFTC, Derivatives, EU Developments, Financial Markets
As contemplated by announcements last month, the European Commission (EC) and the Commodity Futures Trading Commission (CFTC) took action this week to implement mutual recognition of derivatives trading venues in advance of the January 3, 2018 compliance date for the Markets in Financial Instruments Directive (MiFID II) requirement that the most liquid derivative instruments that… Continue Reading

ESMA Publishes Transitional Transparency Calculations for Equity and Bond Instruments

Posted in Derivatives, EU Developments, Financial Markets
On December 7, the European Securities and Markets Authority (ESMA) published transitional transparency calculations (TTC) for equity and bond instruments for the purposes of the revised Markets in Financial Instruments Directive (MiFID II) and the Markets in Financial Instruments Regulation (MiFIR). MiFID II and MiFIR introduce transparency requirements for equities, bonds, structured finance products, emission… Continue Reading

CFTC’s Division of Clearing and Risk Provides No-Action Relief to Certain Foreign Financial Institutions From Swap Clearing Requirements

Posted in CFTC, Derivatives
On November 7, the Commodity Futures Trading Commission’s (CFTC) Division of Clearing and Risk (DCR) published Staff Letters 17-57, 17-58 and 17-59 (Staff Letters), which provided Banco Centroamericano de Integración Económica, the European Stability Mechanism, and the North American Development Bank, respectively, with no-action relief from the swap clearing requirements set forth in Section 2(h)(1)… Continue Reading

Reminder: EU Variation Margin Rules Apply to Physically Settled FX Forwards Beginning January 3, 2018

Posted in Derivatives
Starting January 3, 2018, physically settled foreign exchange forward transactions (FX Forwards) will be subject to the variation (but not initial) margin requirements set out in Commission Delegated Regulation (EU) 2016/2251 of October 4, 2016 (EU Margin Regulation) that apply generally to OTC derivatives. FX Forwards are defined in Article 27 of the EU Margin… Continue Reading

CFTC Extends Swap Dealer De Minimis Threshold Until December 2019

Posted in CFTC, Derivatives
On October 26, the Commodity Futures Trading Commission issued an Order that maintains the swap dealer de minimis threshold at $8 billion until a new de minimis threshold phase-in termination date of December 31, 2019. Prior to the Order, the threshold was set to decrease to $3 billion on December 31, 2018. The CFTC continues… Continue Reading

ESMA Agrees to MiFID II Position Limits Proposed by FCA

Posted in Derivatives, EU Developments, Financial Markets
On October 24, the European Securities and Markets Authority (ESMA) published nine opinions on limits regarding commodity derivatives under the revised Markets in Financial Instruments Directive (MiFID II) and the Markets in Financial Instruments Regulation (MiFIR). The opinions follow the work plan agreed by ESMA and the national competent authorities of the European Union (NCAs),… Continue Reading

Three Developments Concerning EU-US Cross-Border Swaps

Posted in CFTC, Derivatives, Dodd-Frank Developments, EU Developments
On October 13, the Commodity Futures Trading Commission and the European Commission (EC) made three announcements that are significant for cross-border swap activity between the United States and Europe. CFTC Margin Rule Comparability Determination. The CFTC has made a determination that the margin rules for uncleared swaps that apply in the European Union are comparable to… Continue Reading