No-Action Relief Regarding Masking Information Reportable under the OCR Final Rule

On April 8, the U.S. Commodity Futures Trading Commission’s (“CFTC”) Division of Market Oversight issued a no-action letter regarding the masking of information reportable under the ownership and control final rule (the “OCR Final Rule”).  The no-action letter permits reporting parties with reporting obligations on OCR Forms 102A and 102B to mask certain identifying information, subject to conditions, until the earlier of: (i) a reporting party no longer holding the requisite reasonable belief regarding the privacy law consequences of reporting; and (ii) March 1, 2017. Release.

No-Action Letter Issued Regarding the OCR Final Rule

On April 8, the U.S. Commodity Futures Trading Commission’s (“CFTC”) Division of Market Oversight issued a no-action letter regarding the ownership and control final rule (the “OCR Final Rule”).  The OCR Final Rule requires the electronic submission of trader identification and market participant data on new and updated forms.  The no-action letter extends certain relief previously provided and is intended to provide improvements in the reliability and consistency of the OCR data submitted to the CFTC. Release.

The CFTC Announces Final Rule for Alternative to Fingerprinting for Foreign Natural Persons

On March 28, 2016, the U.S. Commodity Futures Trading Commission (CFTC) approved a final rule that will add an alternative method of CFTC registration for foreign natural persons. The CFTC will now accept a registered firm’s criminal history background check on such foreign natural person in place of fingerprints. The final rule is set to take effect 30 days after its publication in the Federal Register. Press Release.

CFTC Approves Final Rule to Amend the Trade Option Exemption by Eliminating Certain Reporting and Recordkeeping Requirements for End-Users

On March 16, the U.S. Commodity Futures Trading Commission approved a final rule that eliminated certain requirements “for trade option counterparties that are neither swap dealers nor major swap participants[.]”  Release.

CFTC Staff Provides No-Action Relief from Registration to Certain Intermediaries Located Outside of the U.S.

On February 12, the U.S. Commodity Futures Trading Commission’s Division of Swap Dealer and Intermediary Oversight provided “no-action relief from registration” to a specific subset of individuals: “persons located outside the United States who act as Introducing Brokers, Commodity Trading Advisors, or Commodity Pool Operators in connection with swaps that are not subject to a CFTC clearing requirement on behalf of persons located outside of the United States.”  Release.

European Commission and U.S. CFTC Agree Common Approach on Requirements for Transatllantic CCPs

On February 10, the European Commission published a statement setting out details of the common approach it has agreed with the U.S. Commodity Futures Trading Commission (CFTC) on requirements for transatlantic central counterparties (CCPs).

The statement explains that the agreement reached will ensure that EU CCPs will be able to do business in the U.S. more easily, and that U.S. CCPs can continue to provide services to EU companies. To implement the agreement:

  • The Commission intends to shortly propose for adoption an equivalence decision under the European Market Infrastructure Regulation (“EMIR”) with respect to CFTC requirements for U.S. CCPs. This will allow the European Securities and Markets Authority (“ESMA”) to recognize U.S. CCPs wanting to serve EU markets as soon as practicable. Once recognized, a U.S. CCP may continue to provide services in the EU while complying primarily with CFTC requirements. It will also become a qualifying CCP for the purposes of the Capital Requirements Regulation (Regulation 575/2013) (CRR), which will lower costs for EU banks and their subsidiaries.
  • The CFTC will propose a determination of comparability with respect to EU requirements. This will permit EU CCPs to provide services to U.S. clearing members and clients while complying primarily with certain corresponding EU requirements. The CFTC will also streamline the registration process for EU CCPs wishing to register with it.
  • The Commission will shortly propose the adoption of an equivalence decision to determine that U.S. trading venues are equivalent to regulated markets in the EU. This will provide a level playing field between EU and U.S. trading venues for the purposes of the Markets in Financial Instruments Directive (2004/39/EC) (MiFID).
  • The steps needed to implement the agreement will be put in place as soon as practicable, and the Commission will work with the CFTC to ensure that the changes are implemented in a co-ordinated manner. The Commission will also work with the CFTC to monitor the impacts resulting from the changes, and assess whether any further actions are necessary to ensure financial stability or prevent regulatory arbitrage.

Commenting on the agreement in a separate statement, ESMA advises that, once the Commission’s equivalence decision on the U.S. regime is adopted under EMIR, it will “rapidly” resume the recognition process of specific CFTC-supervised U.S. CCPs that had applied to it to be recognized in the EU. Although EMIR gives ESMA up to 180 working days to conclude the recognition process, ESMA intends to do everything it can to shorten the period, and will proceed with recognition as soon as the U.S. applicant CCPs meet the conditions contained in the equivalence decision. Given the June 21, 2016 deadline for the start of the EMIR clearing obligation in the EU, ESMA understands that U.S. CCPs will have a strong interest in becoming fully compliant with EU equivalence conditions, which should help to shorten the period.

U.S. Commodity Futures Trading Commission and European Commission Announce Common Approach for Transatlantic CCPs

On February 10, the U.S. Commodity Futures Trading Commission (the “CFTC”) and the European Commission announced a common approach relating to requirements for transatlantic central clearing parties (CCPs). The CFTC and the European Commission will work together to adopt (1) an equivalence decision that will allow US CCPs to continue to provide services in the EU whilst complying with CFTC requirements and (2) a determination of comparability that will allow EU CCPs to provide services to US clearing members whilst complying with EU requirements. These next steps will be put into place as soon as practicable.

U.S. Commodity Futures Trading Commission Division of Clearing and Risk Issues No-Action Relief from Swap Clearing Requirements

On January 8, 2016, the U.S. Commodity Futures Trading Commission’s (the “CFTC”) Division of Clearing and Risk issued no-action relief to certain entities from the swap clearing requirements so long as certain conditions (outlined in the respective letters) are complied with. The covered entities include (1) small bank holding companies and savings and loan holding companies with consolidated assets of less than $10 billion and (2) Community Development Financial Institutions that have been certified by the U.S. Department of the Treasury. Press Release. No-Action letter. No-Action Letter.

 

CFTC Approves Final Rule on Margin Requirements for Uncleared Swaps for Swap Dealers and Major Swap Participants

On December 16, 2015, the U.S. Commodity Futures Trading Commission approved a new regulation for uncleared swaps not regulated by the Federal Reserve Board, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, the Farm Credit Administration or the Federal Housing Finance Agency.  The new rule requires parties to collect margin in order to address concerns of entities taking on excessive risk. Press release.