Financial Services Bulletin: Action at the CFTC


CFTC Proposes Rules For Future Commission Merchants and Derivative Clearing Organizations

On Tuesday, October 23, 2012, the Commodity Futures Trading Commission (the "CFTC") proposed new regulations and amendments to existing regulations pursuant to Sections 4d(a)(2) and Section 4d(f) of the Commodity Exchange Act (the "CEA"), as amended by Section 724(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Dodd-Frank Act").  The proposed regulations and amendments require enhanced customer protections, risk management programs, internal monitoring and controls, capital and liquidity standards, customer disclosures, and auditing and examination programs for futures commission merchants.  The proposal also addresses certain related issues concerning the role of derivatives clearing organizations and the duties of chief compliance officers.

Read the CFTC press release

CFTC Adjusts the Maximum Civil Monetary Penalties for Inflation

On Thursday, October 25, 2012, the CFTC amended its rule that governs the maximum amount of civil monetary penalties, to adjust for inflation.  This rule, adopted pursuant to Section 6(c) of the CEA, as amended by Section 753(b) of the Dodd-Frank Act, sets forth the maximum, inflation-adjusted dollar amount for civil monetary penalties assessable for violations of the CEA and CFTC rules, regulations, and orders thereunder.  These amendments are adopted pursuant to the Federal Civil Penalties Inflation Adjustment Act of 1990, as amended by the Debt Collection Improvement Act of 1996.

Read the CFTC rule

CFTC Announces Temporary No-Action Relief from Certain Recordkeeping Obligations of Swap Dealers and Major Swap Participants

On Friday, October 26, 2012, the CFTC announced the issuance of time-limited no-action relief for swap dealers ("SDs") and major swap participants ("MSPs") concerning certain recordkeeping obligations under Part 23 of the CFTC's Regulations adopted pursuant to Sections 4s(f) and 4s(g) of the CEA, as amended by Section 731 of the Dodd-Frank Act.

The no-action letter will delay until March 31, 2013, the compliance date for the following provisions:

  1. The requirement that SDs and MSPs make and keep records of all oral communications related to pre-execution swap trade information (and communications that lead to the conclusion of a related cash or forward transaction), pursuant to CFTC Regulations 23.202(a) and (b);
  2. The requirement that SDs and MSPs maintain all transaction records and daily trading records in a manner “identifiable and searchable” by transaction and counterparty, pursuant to CFTC Regulations 23.201(a)(1), 23.202(a) and 23.202(b);
  3. The requirement that SDs and MSPs use a Coordinated Universal Time timestamp when recording quotations prior to and at the time of execution of a swap, pursuant to CFTC Regulations 23.202(a)(1)(ii), (a)(2)(iv), (b)(3) and (b)(4); and
  4. The requirement that SDs and MSPs retain swap records at their principal places of business or such other principal offices as designated by the SDs or MSPs.


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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