On June 28, 2018, the Commodity Futures Trading Commission (“CFTC“) published that it had “approved proposed amendments to its regulations to simplify obligations imposed on a self-regulatory organization when carrying out its financial surveillance program for futures commission merchants.” Release.
On May 21, 2018, the Commodity Futures Trading Commission (“CFTC“) Division of Market Oversight and Division of Clearing and Risk issued a joint staff advisory giving exchanges and clearinghouses registered with the CFTC guidance for listing virtual currency derivative products. Release.
On May 16, 2018, the Commodity Futures Trading Commission’s (“CFTC“) Division of Swap Dealer and Intermediary Oversight (“DSIO“) granted relief to non-U.S. counterparties who enter into swaps with International Financial Institutions (“IFIs“), such as development banks. In the no-action letter, DSIO announced it would not recommend that the Commission take action if non-U.S. persons do not include swaps with IFIs when determining whether such non-U.S. persons meet or exceed agency-prescribed registration thresholds. Release.
On May 2, 2018, the Commodity Futures Trading Commission’s (“CFTC“) Division of Market Oversight issued a CFTC staff letter with interpretive guidance regarding CFTC Regulation 150.4(b)(1), an exemption from position aggregation requirements for certain commodity pool investors. According to the staff letter, an institutional investor is not required to look through its investment in a fund to aggregate commodity investment positions of an underlying portfolio company in which such investor may hold a 10% or greater indirect interest when such investor qualifies for the Regulation 150.4(b)(1) exemption from position aggregation. Press Release. Staff Letter.
On January 9, 2018, the U.S. Commodity Futures Trading Commission (the “CFTC“) approved final rules that update Parts 3 and 9 to integrate existing advisory guidance, incorporate swap execution facilities (“SEFs“) and update provisions currently applicable to designated contract markets (“DCMs“). Part 3 governs registration of intermediaries and Part 9 relates to CFTC review of exchange disciplinary, access denial, or other adverse actions. Press Release. Rules.
On January 4, 2018, the Commodity Futures Trading Commission (CFTC) Chairman, J. Christopher Giancarlo, issued a statement on virtual currencies. “The CFTC’s Market Risk Advisory Committee (MRAC), sponsored by CFTC Commissioner Rostin Behnam, has announced that it will hold a meeting on January 31, 2018 to consider the process of self-certification of new products and operational rules by Designated Contract Markets (DCMs) under the Commodity Exchange Act (CEA) and CFTC regulations . . . . The MRAC meeting is scheduled to take place the week after a January 23, 2018 meeting of the CFTC Technology Advisory Committee (TAC), sponsored by CFTC Commissioner Brian Quintenz, which will consider the related challenges, opportunities, and market developments of virtual currencies. Both the MRAC and TAC January meetings are timely and have the support of the full Commission. My fellow Commissioners and I look forward to thorough and thoughtful discussions.”
The Statement is of particular significance because on December 1, 2017, the Chicago Mercantile Exchange Inc. (CME) and the CBOE Futures Exchange (CFE) self-certified new contracts for bitcoin futures products, and the Cantor Exchange (Cantor) self-certified a new contract for bitcoin binary options. At that time, CFTC Chairman Giancarlo stated that “we have had extensive discussions with the exchanges regarding the proposed contracts, and CME, CFE and Cantor have agreed to significant enhancements to protect customers and maintain orderly markets. The Statement also emphasized that “the Commission will continue to assess whether further changes are required to the contract design and settlement processes . . . These activities include monitoring and analyzing the size and development of the market, positions and changes in positions over time, open interest, initial margin requirements, and variation margin payments, as well as stress testing positions.” Press release.
On December 8, 2017, the Commodity Futures Trading Commission (“CFTC“) announced the issuance of an order exempting certain multilateral trading facilities and organized trading facilities authorized within the European Union from the requirement to register with the CFTC as swap execution facilities. The order will become effective on January 3, 2018. Press Release. Order of Exemption.
On December 11, 2017, the Commodity Futures Trading Commission’s Division of Swap Dealer and Intermediary Oversight issued interpretative guidance providing that a futures commission merchant (“FCM“), swap dealer (“SD“), or introducing broker (“IB“) that receives separate compensation for commodity trading advice is not required to register as a commodity trading advisor, provided that the offered advice is “solely incidental” to the conduct of the FCM’s or SD’s business, or “solely in connection with” the operation of the IB’s business. Press Release. CFTC Staff Letter.
On December 15, 2017, the Commodity Futures Trading Commission (“CFTC“) announced a Proposed Interpretation concerning its authority over retail commodity transactions involving virtual currency, such as bitcoin. Specifically, the Proposed Interpretation sets out the CFTC’s view regarding the “actual delivery” exception that may apply to virtual currency transactions. The Proposed Interpretation is open for public comment for 90 days from publication in the Federal Register. To view the full article, click here.
On December 5, 2017, an Implementing Decision was adopted by the European Commission which recognized certain US trading venues under MiFIR.
The Implementing Decision outlined that the European Commission considers US designated contract markets and swap execution facilities as equivalent to trading venues as defined in the MiFID II Directive.
As well as the decision, which is available here, the European Commission and the Commodity Futures Trading Commission (“CFTC“) issued a joint statement which confirmed the ability of EU counterparties to trade derivative instruments which are subject to EU trading obligations on the markets and facilities referred to above.
The joint statement also outlined that the CFTC have recommended to the European Commission that an order of exemption from SEF registration requirements is authorized in the EU.
The joint statement is available here.
