Commodity Exchange Act

CFTC Publishes First Enforcement Manual

 

On May 8, the Division of Enforcement (DOE) of the Commodity Futures Trading Commission (CFTC) published its first Enforcement Manual. The Enforcement Manual establishes certain general policies and procedures to guide the work of the DOE in pursing violations of the Commodity Exchange Act (CEA) and CFTC regulations, and will serve as a general reference for DOE staff in the investigation and prosecution of potential violations of the CEA and CFTC regulations.

CFTC Comparability Determination on EU Margin Requirements and a Common Approach on Trading Venues

On October 13, 2017, the U.S. Commodity Futures Trading Commission (“CFTC“) announced determinations by the CFTC and the European Commission (“EC“) on comparability and equivalence of margin requirements for uncleared swaps. CFTC Commissioners unanimously approved a comparability determination finding the margin requirements for uncleared swaps under the laws and regulations of the European Union (“EU“) comparable in outcome to those under the Commodity Exchange Act (CEA) and CFTC regulations. This determination is effective immediately. This announcement coincides with the EC’s announcement of an equivalence decision which similarly finds that the CFTC’s uncleared swap margin rules are comparable in outcome to the EU’s corresponding margin requirements for uncleared OTC derivatives. Additionally, the CFTC and EC announced a common approach regarding certain CFTC and EU authorized derivatives trading venues. Press Release. Rule. Common Approach.

CTFC Approves Proposed Rules Addressing Application of Certain CEA Regulations to Cross-Border Transactions

On October 11, 2016, the U.S. Commodity Futures Trading Commission (“CFTC“) unanimously approved proposed rules relating to the application of certain swap provisions of the Commodity Exchange Act (CEA) and CTFC to cross-border transactions. The proposed rules address, among other things, key terms for cross-border transactions, registration thresholds and external business conduct standards. The comment period ends 60 days after publication of the proposal in the Federal Register. Press Release.

CFTC Announces Measures to Enhance Protection of Customer Funds

 

On August 8, 2016, the U.S. Commodity Futures Trading Commission (CFTC) announced three separate enhancements relating to the protection of customer funds. The new protections address the exemption of certain Federal Reserve Banks from liability under the Commodity Exchange Act, as well as the use of money market funds by derivatives clearing organizations and futures commission merchants. Press Release.

CFTC Approves Guidance Relating to Appropriate Treatment of Electric Power and Natural Gas Contracts

On April 4, 2016, the U.S. Commodity Futures Trading Commission (the “CFTC”) approved guidance relating to the appropriate treatment of certain electric power and natural gas contracts.  The guidance provides that certain capacity contracts in electric power markets and certain natural gas contracts should not be considered “swaps” under the Commodity Exchange Act.  Release.

CFTC Issues Its First Ever Order of Exemption from Registration as a Derivatives Clearing Organization

On August 18, CFTC issued an order of exemption from registration as a derivative clearing organization (DCO) to ASX Clear (Futures) Pty Limited (ASX). The order is the first of its kind issued by CFTC based on its authority under Section 5b(h) of the Commodity Exchange Act. The provision permits CFTC to exempt a clearing organization from DCO registration if it determines that such organization is subject to comparable and comprehensive supervision by appropriate government authorities in the organization’s home country.  Press Release.

CFTC Issues Time-Limited No-Action Letter on Transaction-Level Requirements in Certain Cross-Border Situations

On November 26, the CFTC issued a time-limited no-action letter that provides relief to swap dealers registered with the CFTC that are established under the laws of jurisdictions other than the United States from certain transaction-level requirements under the Commodity Exchange ActPress Release.  No-Action Letter.

CFTC No-Action Relief for Swap Clearing by Cooperatives and Affiliates

On November 28, the CFTC Division of Clearing and Risk issued time-limited no-action letters granting relief from required clearing under Section 2(h)(1)(A) of the Commodity Exchange Act and the newly adopted Part 50 regulations for (i) certain swaps entered into by qualifying cooperatives and (ii) certain swaps entered into by qualifying affiliated counterparties.  The no-action relief provided by each letter will remain effective until the earlier of April 1, 2013 or the effective date of final rulemaking regarding the clearing exemptions for cooperatives or affiliated counterparties, respectively. CFTC Release (Cooperatives).  CFTC Release (Affiliates).  CFTC No Action Letter (Cooperatives).  CFTC No Action Letter (Affiliates).

CFTC Proposed Order on Non-Financial Energy Derivative Transactions

On August 17, the CFTC approved a proposed order that would exempt some non-financial energy derivative transactions between government-owned electric utilities and cooperatively-owned electric utilities from most of the requirements of the Commodity Exchange Act.  Comments are requested within 30 days after publication in the Federal Register.  CFTC Release.    

CFTC Final Regulations on Phase in Compliance with Clearing Requirements and Proposed Rule on Clearing Determination

On July 24, the CFTC approved final regulations establishing a schedule to phase in compliance with new clearing requirements under the Dodd-Frank Act. As amended by the Dodd-Frank Act, the Commodity Exchange Act provides that a person may not engage in a swap unless the swap is submitted for clearing to a derivatives clearing organization registered under the CEA, or is exempt from registration under the CEA. The regulations will phase in the clearing requirement based on the type of market participant entering into swaps subject to the clearing requirement. The compliance schedule identifies three categories of market participants, and allots a compliance timeframe for each based on level of activity, market experience, resources, and status as registrants with the CFTC or SEC. The CFTC also issued the first proposed clearing determination for credit default swaps and interest rate swaps. The compliance schedule will be triggered upon the final clearing determination. Final Rule Release. Final Rule. Proposed Rule Release. Proposed Rule.