On June 29, the U.S. Commodity Futures Trading Commission voted unanimously to propose a rule that would apply the Commission’s margin requirements for uncleared swaps in the context of cross-border transactions (Proposed Rule). The Proposed Rule would apply to Commission-registered swap dealers and major swap participants that are not subject to the margin requirements of other prudential regulators, such as the Federal Reserve Board, Office of the Comptroller of the Currency, and the Federal Deposit Insurance Corporation (collectively, covered swap entities). The comment period ends 60 days after the publication in the Federal Register. Release.
U.S. Commodity Futures Trading Commission
CFTC Approves Final Rule on Residual Interest Deadline for Futures Commission Merchants
On March 17, the U.S. Commodity Futures Trading Commission (Commission) unanimously approved a final rule removing the December 31, 2018 automatic termination of the phased-in compliance period for the Residual Interest Deadline for futures commission merchants (FCMs). Release.
FSA Fines Barclays £59.5 Million for Manipulation of LIBOR
On 27 June 2012, the FSA published the final notice issued to Barclays Bank plc, detailing a £59.5 million fine for misconduct relating to its submission of rates that formed part of the London Interbank Offered Rate (“LIBOR”) and the Euro Interbank Offered Rate (“EURIBOR”). This is the largest ever fine that the FSA has imposed. Final Notice.
In particular, Barclays breached the following Principles:
- Principle 5 (market conduct) – Barclays was found to have breach Principle 5 by making US dollar LIBOR and EURIBOR submissions that took into account requests made by interest rate derivatives traders.
- Principle 3 (management and control) – Barclays did not have adequate risk management systems or effective controls in place relating to its LIBOR and EURIBOR submission process.
- Principle 2 (skill, care and diligence) – Barclays failed to conduct its business with due skill, care and diligence when considering issues raised internally relating to its LIBOR submissions.
In addition to the fine by the FSA, the U.S. Commodity Futures Trading Commission fined Barclays $200 million, and Barclays agreed to pay a penalty of $160 million as part of an agreement with the U.S. Department of Justice.
The Barclays settlement is the first settlement announced in connection with the LIBOR probe, with regulators investigating more than 20 banks.