On October 8, the National Futures Association (NFA) issued Notice I-19-19 announcing the effective date of the updated Interpretive Notice Compliance Rule 2-9: Supervision of Branch Offices and Guaranteed IBs, which establishes minimum requirements that member firms should implement to supervise their branch offices and guaranteed introducing brokers’ (IB) compliance with certain regulatory requirements. The updated Interpretive Notice is effective January 1, 2020, although NFA members may act in reliance on the guidance immediately.

Continue Reading

On September 19, the Securities and Exchange Commission adopted a package of new final rules and rule amendments dealing with recordkeeping and reporting requirements for security-based swap dealers (SBS dealers). In general, the SEC is requiring SBS dealers to create and maintain records with respect to security based-swaps in a manner consistent with current recordkeeping and record retention rules that apply to broker-dealers. The SEC is, however, providing alternate compliance mechanisms that will allow an SBS dealer that also is a swap dealer but is not a broker-dealer to comply with Commodity Futures Trading Commission (CFTC) rules instead and will allow a non-US SBS dealer to request permission to comply with its home country rules.
Continue Reading

On September 17, the directors of the Federal Deposit Insurance Corporation (FDIC) approved a joint notice of proposed rulemaking (NPR) with respect to the prudential regulator margin rules for non-cleared swaps. The joint form of the NPR indicates that the other prudential swap regulators (the Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, the Farm Credit Administration and the Federal Housing Finance Agency) will all be approving the same NPR in the near future.
Continue Reading

On September 9, the Market Risk Advisory Committee of the Commodity Futures Trading Commission (CFTC) approved some “plain” English disclosures concerning the risks of executing new derivative transactions involving interbank offered rates (IBORs) that will be replaced by new benchmark rates in the relatively near future. The disclosures, which are not mandatory, are intended as “helpful examples” of the information that market participants should share, as appropriate, with all clients and counterparties with whom they continue to transact derivatives referencing London Interbank Offered Rate (LIBOR) and other IBORs. They are drafted for use on a transaction-by-transaction basis, but alternatively can be delivered as part of general risk disclosures. The disclosures will be submitted to the CFTC for consideration.
Continue Reading

On September 13, the Commodity Futures Trading Commission (CFTC) announced the extension of the public comment periods for two rule proposals. First, the CFTC announced that it will extend the comment period from September 17 to November 18 for the proposed alternative compliance framework for derivatives clearing organizations (DCOs) organized outside of the United States that do not pose substantial risk to the US financial system (Alternative Compliance Framework Proposal). Under the Alternative Compliance Framework Proposal, these DCOs would be able to register with the CFTC, yet comply with the core principles applicable to DCOs in the Commodity Exchange Act through their compliance with the regulatory regime of their home country, subject to certain conditions and limitations.
Continue Reading

On September 13, the CFTC and European Commission issued a joint statement reaffirming their mutual commitment to transatlantic cooperation among regulators (Joint Statement). The Joint Statement was released following a September 5 meeting between CFTC Chairman Heath Tarbert and John Berrigan, Deputy Director General for Financial Stability, Financial Services and Capital Markets Union (DG FISMA), European Commission.
Continue Reading

On September 16, the Commodity Futures Trading Commission (CFTC) unanimously approved 1) a final rule on security futures product (SFP) position limits and position accountability for (Final Rule); and 2) a proposed rule on public rulemaking procedures (Proposed Rule).
Continue Reading