The staff of the Division of Clearing and Risk of the Commodity Futures Trading Commission recently released its findings from a supervisory stress test it conducted across five derivatives clearing organizations registered with the CFTC: CME Clearing, ICE Clear Credit, ICE Clear Europe, ICE Clear U.S. and LCH Clearnet Ltd. This is the first stress test that the CFTC has performed across multiple clearing organizations; such tests will be a regular part of the CFTC’s risk surveillance program going forward.
Continue Reading CFTC Staff Issues Results of Supervisory Stress Test of Clearing Organizations

The Commodity Futures Trading Commission’s Division of Market Oversight recently issued a press release to remind all participants in CFTC-regulated derivatives markets that certain time-limited no-action relief from compliance with certain provisions of the Ownership and Control Report (OCR) final rule expires on November 18.
Continue Reading CFTC Division of Market Oversight Reminds Market Participants of the Upcoming Expiration of Certain No-Action Relief From the Ownership and Control Final Rule

On October 7, the Financial Industry Regulatory Authority issued a Trade Reporting Notice regarding its Alternative Display Facility (ADF). In particular, member firms that use the ADF to report over-the-counter trades in national market system stocks can elect to have their trades submitted by the ADF to the National Securities Clearing Corporation (NSCC) for clearance and settlement. However, to make this election, such trades must either be locked in prior to submission via agreement by both parties to the trade, or may be locked in by the system in accordance with FINRA rules.
Continue Reading “Trade Match” and “Trade Acceptance” Clearing Submissions on FINRA’s Alternative Display Facility

On October 7, the Commodity Futures Trading Commission’s Division of Market Oversight and Division of Clearing and Risk issued No-Action Letter No. 16-74 granting relief to Swap Execution Facilities (SEFs) from the requirement in CFTC Regulation 43.2 that a swap block trade must take place away from a SEF’s trading system or platform. The No-Action letter extends relief previously granted to SEFs in CFTC Letter No. 15-60 and Letter No. 14-118.
Continue Reading CFTC Further Extends Time-Limited Relief to SEFs for Block Trades

On October 13, the Division of Market Oversight (Division) of the Commodity Futures Trading Commission released the results of its rule enforcement review of the market surveillance program of the New York Mercantile Exchange, Inc. and the Commodity Exchange, Inc. (collectively, the “Exchanges”). The review, which focused on the period from March 1, 2014 through March 1, 2015, focused on the Exchanges’ compliance with Core Principle 2 (Compliance With Rules), Core Principle 4 (Prevention of Market Disruption), Core Principle 5 (Position limitations or Accountability) and regulations related to the Exchanges’ market surveillance program. The purpose of the review was to determine 1) whether the program complies with the Core Principles and CFTC regulations; 2) whether there are any deficiencies in the program; and 3) whether the Division should make any recommendations to improve the program. For the purposes of rule enforcement reviews, a “deficiency” is an area where the Division believes an exchange is not in compliance with a CFTC regulation and must take corrective action; and a “recommendation” is in an area where the Division believes the exchange should improve its compliance program. The Division is conducting a separate review of the Exchanges’ procedures relating to Exchange for Related Positions.
Continue Reading CFTC Releases Rule Enforcement Review of the New York Mercantile Exchange, Inc. and the Commodity Exchange, Inc.

On August 25, the Securities and Exchange Commission (SEC) issued notices (Notices) to the Financial Industry Regulatory Authority and the Municipal Securities Rulemaking Board (MSRB and together with FINRA, SROs) stating that it intends to approve pay-to-play rules proposed by both. In the Notices, the SEC elaborated that the proposals impose substantially equivalent or more stringent restrictions than the SEC’s existing pay-to-play rule. Because the SEC already has a pay-to-play rule (17 CFR 275.206(4)-5 (Rule 206(4)-5)), the SROs cannot pass their own separate pay-to-play rules unless the SEC approves them.
Continue Reading SEC To Approve FINRA and MSRB Pay-To-Play Rules

On August 29, the Securities and Exchange Commission announced the adoption of amendments to the Securities Exchange Act of 1934 (Exchange Act) Rule 13n-4 (Amended Rule) that implement the statutory requirement that security-based swap data repositories (SBSDR) provide certain data involving security-based swaps, including individual counterparty trade and position data (Data), to certain regulators and other entities provided that certain conditions are met.
Continue Reading SEC Adopts Amendments to Rules on Access to Data Obtained by Security-Based Swap Data Repositories

On August 4, the Division of Swap Dealer and Intermediary Oversight, Division of Clearing and Risk and Division of Market Oversight of the Commodity Futures Trading Commission extended no-action relief (Relief) from certain transaction-level requirements previously granted to certain non-US swap dealers (SDs). Transaction-level requirements include: (1) required clearing and swap processing; (2) mandatory trade execution; (3) swap trading relationship documentation; (4) portfolio reconciliation and compression; (5) real-time public reporting; (6) trade confirmation; (7) daily trading records; and (8) external business conduct standards.
Continue Reading CFTC Extends Relief for Non-US Swap Dealers From Transaction-Level Requirements

On August 9, the Commodity Futures Trading Commission announced that it is proposing amendments to CFTC Regulation 3.3 to codify and supersede no-action relief previously granted in CFTC Staff Letter No. 15-15, issued March 27, 2015, with respect to the date by which the Chief Compliance Officer (CCO) of each futures commission merchant, swap dealer (SD) and major swap participant (MSP) (each a registrant) must file an annual report (CCO Annual Report) with the CFTC. Regulation 3.3 currently provides that the CCO Annual Report must be filed with the CFTC not more than 60 days after the registrant’s fiscal year-end. Consistent with Letter No. 15-15, the amendments, if adopted, would provide each registrant an additional 30 days to file the CCO Annual Report.
Continue Reading CFTC Proposes to Amend the Timing for Filing Chief Compliance Officer Annual Reports by Certain Registrants