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Client Memoranda

Guide to

 Final Rules on Roles for Swap Dealers and Major Swap Participants

April 27, 2012
 

Introduction

On February 23, 2012, the U.S. Commodities Futures Trading Commission (the “Commission” or “CFTC”) approved four final rules impacting the responsibilities and roles of swap dealers (“SDs”) and major swap participants (“MSPs”). The CFTC rules attempt to minimize trading risk for SDs and MSPs through establishing record keeping, reporting, and risk management requirements, and eliminating conflict of interest. As the Commission has not yet released the rules in full text, this preliminary overview is compiled from the fact sheet accompanying the rule making.

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Guide to Final and Interim Final Rulemaking on Commodity Options

April 27, 2012

Introduction

On April 18, 2012, the U.S. Commodities Futures Trading Commission (the “Commission” or “CFTC”) announced that it would adopt a final and interim final rule to address commodity options under the same laws and rules applicable to all other swaps. The rule is in accordance with section 721 of the Dodd-Frank Act, which defines “swap” under section1a(47) of the CEA. It applies to the commodity options that are subject to the definition of “swap,” which includes “a put, call, cap, floor, collar, or similar option of any kind that is for the purchase or sale, or based on the value of one or more…commodities….” Exchange traded options do not fall under the definition of swap, and this rule will not apply to them. The term “swap” is awaiting further definition by the CFTC.

 

The rule will become effective 60 days post-publication in the Federal Register, and the compliance date will occur 60 days after the Commission and SEC defines swap and publishes the definition in the Federal Register, as pursuant to section 721 of the Dodd-Frank Act.

 

As the Commission has not yet released the rules in full text, this preliminary overview is compiled from the fact sheets accompanying the rule making.

Guide to Final Rules on Definition of Swap Dealer, Major Swap Participant, and Eligible Contract Participant

April 27, 2012

Introduction

On April 18, 2012, the U.S. Commodities Futures Trading Commission (the “Commission” or “CFTC”) added definitions of the terms “Swap Dealer” (“SD”), “Major Swap Participant” (MSP), and “Eligible Contract Participant” (“ECP) to the Commodity Exchange Act (“CEA”). The persons and entities that fall under the definition will be required to meet certain statutes affecting registration, margin, capital, and business conduct standards. Those who do not meet the definition of “eligible contract participants” will be prohibited from entering a swap on a designated contract market. As the Commission has not yet released the rules in full text, this preliminary overview is compiled from the fact sheets accompanying the rule making.

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Final Rules on Compliance Obligations for Commodity Pool Operators and Commodity Trading Advisors

March 27, 2012

Introduction

On March 26, 2012, the U.S. Commodities Futures Trading Commission (the “Commission” or “CFTC”) approved amendments to its existing part 4 regulations and enacted one new regulation for Commodity Pool Operators (“CPOs”) and Commodity Trading Advisors (“CTAs”). Under the amendments, certain CPOs are no longer exempt from registration, and qualified eligible persons (“QEPs”) are no longer exempt from the certification requirement for annual reports. The adopted amendments modified the criteria for claiming exclusion as a CPO, and required the annual filing of notices claiming exemption under several sections of the Commission’s regulations. There are also new risk disclosure requirements for CPOs and CTAs regarding swap transactions. (more…)

Introducing Broker (IB) Registration

February 20, 2012

Introduction

Since 2008, the U.S. Commodities and Futures Trading Commission (CFTC), an independent federal agency, has steadily imposed new regulations on the commodities and futures options markets in the United States. In 2010, the CFTC introduced new registration rules for Introducing Brokers (IBs). Under the Commodities Exchange Act (CEA), passed by the CFTC, IBs must register with the CFTC. The NFA registers IBs in compliance with CFTC regulation.

 

This guide provides general information on registering as an IB. It is not to be considered legal advice. This document defines IBs, and outlines the procedures required for individuals or firms to register as IBs with the CFTC. It also describes the IBs that are exempt from registration.

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