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Articles tagged by CFTC

CFTC Issues CCP Recovery, Wind-Down Guidance The US Commodity Futures Trading Commission’s (CFTC) Division of Clearing and Risk (DCR) has issued guidance to clearinghouses to further the development of recovery plans and wind-down Plans.  The CFTC says that for clearinghouses, or Derivatives Clearing Organisations (DCOs), ...
CFTC Report Provides Little Clarity on Swaps Rules The Commodity Futures Trading Commission (CFTC) has issued its final report on the de minimis threshold for swap dealer registration, yet it remains unclear whether the Commission will make changes to this threshold. The current de minimis threshold for swap ...
CFTC Piles in on FXCM over January 15 Even as FXCM continues to extricate it from a punitive loan that saved the firm, its travails are increasing with news the US Commodity Futures Trading Commission (CFTC) has charged the firm over events surrounding its near collapse in the ...
CFTC Charges Deutsche Over Swaps Reporting Outage The US Commodity Futures Trading Commission (CFTC) has formally charged Deutsche Bank over a breakdown in th ebank’s systems that led to it not reporting swaps data for five days. The CFTC filed the civil Complaint in the US ...
FXCM Hits Back at CFTC Charges FXCM has issued a statement expressing severe disappointment at the charges leveled against the firm by the Commodity Futures Trading Commission (CFTC), stating that they are “unprecedented and unwarranted”.  The CFTC claims relate to when the Swiss National Bank (SNB) ...
And Finally... This should be the time to tiptoe (very gently) back into the murky twilight that exists between the legal/regulatory profession and markets, but as this column rarely believes in doing anything gently, we’ll just pile right in. Are ...
CFTC Issues Last Minute Reprieve on Margin Rules Responding to industry concerns it was not ready for the CFTC's margin on uncleared swaps rule, the Commission has granted a stay of execution
CFTC Approves System Safeguards, Japanese Swaps Rules The US Commodity Futures Trading Commission (CFTC) has approved two final rules for system safeguards testing requirements, as well as a comparability determination for Japan’s margin requirements for uncleared swaps. By a unanimous vote, CFTC Commissioners approved final rules for system safeguards testing requirements for designated contract markets, swap execution facilities, swap data repositories, and derivatives clearing organisations. “Cybersecurity is a top concern for American companies, especially financial firms. These rules are a good step forward in addressing these concerns,” said Commissioner Sharon Bowen in a statement today.
VTB Group Fines by CFTC for Fictitious Trades The US Commodity Futures Trading Commission (CFTC) has levied a $5 million fine against Russia’s JSC VTB Bank and its subsidiary VTB Capital for executing fictitious and non-competitive block trades in Russian ruble futures contracts, which were cleared through the Chicago Mercantile Exchange. VTB Capital, a U.K.-incorporated bank, is 94% owned by a holding company that, in turn, is 100% owned by VTB. The Order finds that between December 2010 and June 2013, VTB and VTB Capital executed over 100 block trades in RUB/USD futures contracts on CME, with a notional value of approximately $36 billion. s.
CFTC Takes Action Against FX CTA The US Commodity Futures Trading Commission (CFTC) has filed a civil enforcement action against a CTA claiming to have grown 2,675% in two years with a 99.55% trade win ratio. Jamal Vance and All City Investments (All City) are the defendants in the action, they are charged with solicitation fraud in connection with an FX scheme and with failure to register as Commodity Trading Advisors (CTAs). According to the CFTC’s complaint, the defendants solicited customers on their website to open and deposit funds into their own accounts with a brokerage services firm that provides an online forex trading platform, and to sign a limited power of attorney form, which designated All City as that customer’s agent and attorney-in-fact for the purpose of buying and selling margined FX transactions for the customer’s account.
CFTC Commissioner Calls for Regulatory Re-Think After Sterling Flash Crash A senior member of the Commodity Futures Trading Commission (CFTC) has called for a “thorough and unbiased analysis” by global financial regulators of the systemic risk of “unprecedented capital constraining regulations on global financial and risk-transfer markets”. In a statement issued today, CFTC commissioner Christopher Giancarlo repeats his warning over liquidity risk in financial markets, noting, “The increased risk is in part due to untested bank capital constraints imposed by US and overseas bank regulators under the Dodd-Frank Act and similar laws.”
An Incomplete Picture: Spotting the Spoofer in FX The incarceration of a trader convicted of spoofing has heightened awareness of the practice, but how hard is it to spot and how prevalent is it in FX? Colin Lambert investigates. “You have to be pretty desperate to resort to spoofing markets – especially on exchanges where it’s nigh on impossible to shield your activities,” argues a senior electronic trader in London. “Even in OTC markets it’s not easy to get away with given the MIS capabilities of firms today.”
CFTC Extends $8bn Swap Dealer Threshold The US Commodity Futures Trading Commission (CFTC) has extended the current swap dealer registration de minimis threshold phase-in termination date until December 31, 2018. The de minimis threshold determines when an entity’s swap dealing activity requires registration with the CFTC. Registration triggers capital and margin requirements as well as other responsibilities, such as disclosure, recordkeeping, and documentation requirements. Currently the de minimis threshold for firms having to register as a major swap dealer is $8 billion, but this was due to expire on December 31, 2017, at which point the threshold would have been lowered to $3 billion.
CFTC Drops Deutsche Bank FX Investigation The US Commodity Futures Trading Commission (CFTC) has closed its investigation into Deutsche Bank’s FX business, the bank revealed in its Q3 results today. In May 2015, a number of major banks were fined more than $5.8 billion for practices relating to alleged collusion and manipulation of the spot FX market around the 4pm London Fix, by a number of regulatory authorities, including the CFTC. Deutsche was not one of the firms named in those settlements, but remained under investigation by the CFTC for its FX market practices.
A New Twist On An Old Investigation? FX Options Brokers Still Under Scrutiny In November last year Profit & Loss reported on an investigation by New York Attorney General Eric Schneiderman into practices and conduct on the FX options desks of three major inter-dealer brokers. Now, according to a report, that investigation is not only ongoing, but it has broadened beyond the original "spoofing" or "flying" of fake bids and offers, into a look at the what may be the inappropriate sharing of market information and the rigging or influencing of market auctions.
CFTC Staff Clash Over Automated Trading Rules Staff at the Commodity Futures Trading Commission (CFTC) clashed over the supplemental proposal to the Automated Trading Regulation (RegAT), even though the proposals were ultimately approved today by the Commission. In a meeting in Washington today CFTC Commissioner, Christian Giancarlo, who voted against the proposal, disagreed with Chairman Timothy Massad on a number of issues relating to RegAT. The main point of contention was the access that the proposed rules would give the CFTC to automated trading firms’ source code, which has drawn some strong criticism from market participants and industry bodies throughout this year.
Industry Bodies Continue Opposition to Source Code Access Following the CFTC meeting that approved the Commission’s proposed supplement to its draft rules on automated trading, the Futures Industry Association (FIA) and the FIA Principal Traders Group – which represents proprietary trading firms – expressed their “grave concerns” over the change which would grant CFTC access to proprietary source code. The change “would permit an unacceptable level of access to proprietary source code used to operate automated trading systems”, the two bodies say in a statement, adding they will submit formal feedback during the supplement’s public comment period.
How Will the Election Change the US Regulatory Landscape? As FX markets continue to anticipate what will happen next following Donald Trump’s surprise victory in the US Presidential election, there could also be significant changes in the country’s regulatory landscape that financial services firms need to consider. For starters, the Commodity Futures Trading Commission (CFTC) could look very different. Historically, when there’s a transition of parties, the Chairman of the Commission has tendered their resignation on the inauguration day of the new President and then the remaining Commissioners vote amongst themselves for an acting chairman.
Clearinghouses Pass CFTC Stress Test The five clearinghouses under US jurisdiction have passed the Commodity Futures Trading Commission’s (CFTC) first stress test. The purpose of the test was to assess the impact of a hypothetical set of what the CFTC says is an extreme but plausible market scenarios across multiple clearinghouses and their clearing members. The analysis included five clearinghouses registered with the CFTC located in the US as well as in the UK, they are CME Clearing, ICE Clear Credit, ICE Clear Europe, ICE Clear US, and LCH Clearnet. It encompassed cleared futures and options, interest rate swaps, and credit default swaps. The analysis included the largest clearing members (measured by margin deposited) at each clearinghouse.
Sexton New Head of NFA Thomas Sexton has been named as the National Futures Association’s new president and CEO, succeeding Dan Roth, who is retiring. The appointment is effective March 1 2017 and was unanimously endorsed by NFA’s board after what the association says was an “exhaustive” search process. Sexton is an existing member of NFA, which is a self-regulatory organisation for the US derivatives industry, having joined the association in 1991 as an attorney and subsequently being promoted to assistant general counsel in 1998, and to general counsel and secretary in 2001.
Flash Crash Trader Fine Endorsed by US Court A US district court judge has entered a consent order brought by the US Commodity Futures Trading Commission (CFTC) against UK-based trader Navinder Singh Sarao. Sarao was accused by US authorities of helping to trigger the infamous flash crash in US equity markets in May 2010 and was extradited to the US recently. The order requires him to pay a $25,743.174.52 civil monetary penalty and $12,871,587.26 in disgorgement. It also permanently prohibits Sarao from further violations of the Commodity Exchange Act (CEA) and CFTC regulations, as charged, and imposes permanent trading and registration bans against him.
CFTC Extends Relief on Reporting Rules The Commodity Futures Trading Commission (CFTC) has issued a time-limited no-action letter that extends relief provided to certain CFTC-registered swap dealers (SD) and major swap participants (MSP) in CFTC Letter No. 15-61. The latest no-action letter states that the commission’s Division of Market Oversight will not recommend the CFTC take an enforcement action against a non-US SD or a non-US MSP established in Australia, Canada, the European Union, Japan or Switzerland, that is not part of an affiliated group in which the ultimate parent entity is a US SD, US MSP, US bank, US financial holding company, or US bank holding company, for failure to comply with the swap data reporting requirements of Part 45 and Part 46 of the CFTC’s regulations (SDR Reporting Rules), with respect to its swaps with non-US counterparties that are not guaranteed affiliates, or conduit affiliates, of a US person.
CFTC Collects $1.3 Billion from Enforcement Actions The Commodity Futures Trading Commission (CFTC) says in financial year 2016 it filed 68 enforcement actions, which addressed a sweeping range of misconduct and market harm, and obtained orders totaling approximately $1.29 billion in restitution, disgorgement, and penalties. Along with new enforcement actions, the CFTC says it aggressively pursued litigation in over 100 cases, including significant and complex cases charging manipulation, spoofing, and unlawful use of customer funds, and won liability verdicts in both jury and bench trials in US District Courts.
Why FX Needs a Unique Regulatory Approach Matt Kulkin, a partner at Steptoe and Johnson, explains to Profit & Loss deputy editor, Galen Stops, why a “copy and paste” approach to regulation won’t work for FX. FX is often referred to as an “unregulated” or “self-regulated” market, and yet in recent years bans have been fined billions of dollars by regulators for alleged infractions in this market, while criminal charges are being brought against FX traders in the US courts. Kulkin explains this disparity by pointing out that the entities involved this market are regulated and therefore subject to oversight by a various national authorities. However, unlike the securities markets or the OTC derivatives markets, there aren’t concrete regulations regarding the market place, he says.
And Finally... If I were a cynic I would raise a quizzical eyebrow at the timing of the CFTC’s announcement on Friday that it has proposed “supplements” to some of the detail around RegAT. This rule has raised significant controversy over what seemed to be a proposal to have source code stored with the CFTC, but, according to CFTC, apparently it was all a misunderstanding! A cynic would also ask why something that is "misunderstood" needs rewriting of course, but I'm sure we're above that...