On December 3, the National Futures Association (NFA) proposed amendments to various NFA Compliance Rules and Interpretive Notices related to discretionary customer accounts, customer information, risk disclosures and bunched orders to apply to cleared swaps, in addition to other minor amendments. Most notably, NFA proposal would amend the following:
Continue Reading NFA Proposes Amendments to Several NFA Rules and Interpretative Notices to Apply to Cleared Swaps

The Commodity Futures Trading Commission (CFTC) will hold an open meeting on December 10 at 9:00 a.m. Eastern to cover the following topics:

  • Proposed Rule: Capital Requirements for Swap Dealers and Major Swap Participants – Reopening the Comment Period and Requesting Additional Comment
  • Proposed Rule: Amendments to the Swap Clearing Requirement Exemption for Inter-Affiliate Swaps

On July 23, the Basel Committee on Banking Supervision (BCBS) and the International Organization of Securities Commissions (IOSCO) published a revised framework for mandatory initial margin applicable to swaps that are not cleared with a central clearing party. The key revision was the insertion of an additional year into the implementation schedule for the margin rules.
Continue Reading Delay of Final Implementation of Swap Initial Margin Rules

On August 14, the Joint Audit Committee (JAC) released Regulatory Alert #18-04. The Alert, which responds to industry requests, clarifies the procedures that a futures commission merchant (FCM) should follow prior to making an intra-day withdrawal from the residual interest amount that the FCM maintains in its segregated, secured 30.7 and cleared swap customer accounts (Accounts) in order to ensure compliance with applicable Commodity Futures Trading Commission regulations.
Continue Reading Joint Audit Committee Publishes Regulatory Alert Regarding Residual Interest Withdrawals

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)

On January 26, the Commodity Futures Trading Commission’s Division of Swap Dealer and Intermediary Oversight (Division) issued CFTC Letter No. 17-03, in which the Division authorized futures commission merchants (FCMs) that carry cleared swaps customer accounts to withdraw excess residual interest from the cleared swaps customer accounts prior to the time provided in CFTC Rule 22.17(b), subject to the terms and conditions in the letter. As explained by the Division, CFTC Regulation 22.2(f)(6)(iii)(A) requires an FCM, prior to the time of clearing settlement with a derivatives clearing organization (DCO), to maintain residual interest in cleared swaps customer accounts that is equal to, or exceeds, the aggregate amount by which each cleared swaps customer is undermargined. For cleared swaps, this means that an FCM must have funds or investments in the cleared swaps customer accounts to cover the aggregate undermargined amount before the time of settlement with DCOs. Margin payments from the cleared swaps customers are generally thereafter received throughout the day.
Continue Reading CFTC Staff Grants No-Action Relief From Residual Interest Withdrawal Restrictions

On January 13, the Commodity Futures Trading Commission issued an order authorizing LCH.Clearnet Limited (LCH), a CFTC-registered derivatives clearing organization (DCO), and its clearing members that are registered futures commission merchants to: (1) commingle in a cleared swaps customer account customer money, securities and property used to margin, secure or guarantee both futures and foreign

On December 19, 2016, the Division of Market Oversight (Division) of the Commodity Futures Trading Commission provided time-limited no-action relief from the swap data recordkeeping and reporting requirements for cleared swaps (cleared swaps rule) to which derivatives clearing organizations (DCOs) and reporting entities would otherwise have been subject on December 27, 2016. Subject to certain conditions, DCOs are now relieved from obligations to report original swap terminations under the cleared swaps rule. This relief will expire on the earlier of 12:01 a.m. on June 27, 2017, or the date that all DCOs that will be reporting original swap termination messages to a swap data repository (SDR) have successfully tested the termination message reporting systems.
Continue Reading CFTC Staff Issues Time-Limited No-Action Relief for Derivatives Clearing Organizations and Other Reporting Entities From Certain Obligations on Cleared Swap Reporting