Maureen C. Guilfoile

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On July 16, National Futures Association (NFA) announced that it will conduct a review of its audit practices and procedures and the execution of those procedures with respect to Peregrine Financial Group, Inc. (PFG). The announcement comes a week after NFA issued an emergency enforcement action against PFG for failing to maintain adequate funds in …

On July 17, the CFTC’s Division of Market Oversight granted non-clearing member swap dealers temporary no-action relief from the larger swap trader reporting requirements for physical commodities indentified in CFTC Regulation 20.4. Regulation 20.4 requires daily reports from clearing members and swap dealers. Under the large trader reporting rule, swap dealers that are not clearing members are required to comply with Part 20, including the daily reporting requirements proscribed by Regulation 20.4, by the effective date for the CFTC’s final regulations providing a further definition for the term swap dealer (July 23). The no-action relief indicates that the CFTC will not recommend an enforcement action against non-clearing member swap dealers for failure to submit Section 20.4 reports until 60 days after the swap dealer registration application date, which is defined as the effective date of the further definition of the term swap.
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Continue Reading CFTC Issues Temporary No-Action Relief For Non-Clearing Swap Dealers

The Commodity Futures Trading Commission has adopted amendments to CFTC Rules 1.25 and 30.7 that would narrow the scope of permissible investments for customer funds held by futures commission merchants (FCMs) and derivatives clearing organizations (DCOs) in the customer segregated account maintained under section 4d(a)(2) of the Commodity Exchange Act or the foreign futures and foreign options secured amount account maintained in accordance with CFTC Rule 30.7. Among the key investment categories that will no longer be permitted under the amended rule are (i) foreign sovereign debt obligations, (ii) commercial paper and corporate notes or bonds (other than certain instruments that are fully guaranteed by the U.S. government pursuant to the Temporary Liquidity Guarantee Program (TLGP)), and (iii) inter-affiliate resale and repurchase transactions and certain internal transactions (i.e., “internal repos”).

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Continue Reading CFTC Adopts Final Rule on Investment of Customer Funds

If a swap execution facility (SEF) or designated contract market (DCM) makes a “swap available to trade,” all other SEFs and DCMs listing or offering that swap or an economically equivalent swap must also make those swaps available to trade for purposes of the trade execution requirements of section 2(h)(8) of the CEA. The Commodity Futures Trading Commission has now proposed a rule setting forth the process by which SEFs and DCMs may make a swap “available to trade.”
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Continue Reading CFTC Issues Proposed Rule on Process for Making a Swap Available to Trade

The Commodity Futures Trading Commission has adopted final rules (which are substantially similar to the proposed rules) that replace the existing system of staff-issued no-action letters with a registration system for foreign boards of trade (FBOTs) seeking to provide their members or other participants located in the U.S. with direct access to the FBOT’s electronic order entry and trade matching system. The standards and procedures for registration (as well as an appendix containing two application forms—one for the FBOT and one for the clearing organization—and describing the information required to be submitted as part of an application) are set out in a new Part 48 of the CFTC’s regulations.
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Continue Reading CFTC Adopts Final Rule on Registration on Foreign Boards of Trade

Amendments made to the Commodity Exchange Act by the Dodd-Frank Wall Street Reform and Consumer Protection Act (the Dodd-Frank Act) require that an agreement, contract or transaction in any commodity that is entered into with, or offered to, a non-eligible contract participant or non-eligible commercial entity on a leveraged, margined, or financed basis must be conducted on a regulated exchange and be subject to the Commodity Futures Trading Commission’s anti-fraud authority, unless actual delivery of the commodity is made within 28 days. The CFTC has issued an interpretation of the term “actual delivery” containing guidance on how the CFTC will construe this requirement.
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Continue Reading CFTC Issues Interpretation of Dodd-Frank Anti-Fraud Authority

The Commodity Futures Trading Commission’s Division of Market Oversight has issued a guidebook containing additional guidance and detailed instructions for submitting large swap trader reports required by new Part 20 of the CFTC’s rules. Clearing organizations and clearing members were required to begin reporting on cleared swaps on November 21, 2011, and are required to…

The Commodity Futures Trading Commission’s Technology Advisory Committee will hold a public meeting on December 13, to address: (1) emerging issues in relation to swap execution facilities; (2) high frequency traders and their market impact; and (3) interim recommendations from the subcommittee on data standardization regarding universal product and legal entity identifiers, standardization of machine-readable legal contracts, and data storage and retrieval.
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Continue Reading Public Meeting of the Technology Advisory Committee