Financial Services Bulletin: Action At The CFTC And CFPB


CFTC Proposes Registered Futures Association Membership Rules

On Friday, November 8, 2013, the Commodity Futures Trading Commission (the "CFTC") proposed amending its regulations to require that all persons registered with the CFTC as introducing brokers, commodity pool operators, and commodity trading advisors must become and remain members of at least one registered futures association.  This regulation is proposed pursuant to Section 8(a)(5) of the Commodity Exchange Act (the "CEA").

Read the proposed CFTC rules

CFTC Adopts Final Futures Commission Merchants Rules

On Thursday, November 14, 2013, the CFTC adopted new regulations and amended existing regulations to 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 ("FCMs").  The rules are adopted pursuant to Sections 4d(a)(2) and 4d(f) of the CEA, as amended by Section 724(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Dodd-Frank Act").

The final rules require increased protections for customer segregated funds, secured amount funds, and cleared swaps funds.  In addition, the final rules require that customers are provided with greater notice of the risks of futures trading and the risks related to the FCMs with which they may choose to do business.  The final rules also seek to ensure that FCMs are monitoring and managing risks in a robust manner, and that the capital and liquidity of FCMs are strengthened to safeguard their continued operations.  Finally, the rules require the auditing and examination programs of the CFTC and self-regulatory organizations to monitor the activities of FCMs in a prudent and thorough manner.

Read the CFTC rules

CFTC Issues Final Derivatives Clearing Organizations Rules

On Friday, November 15, 2013, the CFTC finalized rules to establish standards for systemically important derivatives clearing organizations ("SIDCOs").  The CFTC passed these rules pursuant to Section 5b(c)(2) of the CEA, as amended by Section 725(c) of the Dodd-Frank Act.

Together with existing rules, these rules establish CFTC regulations that are consistent with the Principles for Financial Market Infrastructures published by the Committee on Payment and Settlement Systems and the Board of the International Organization of Securities Commissions.  The rules allow SIDCOs to continue to be considered Qualifying Central Counterparties ("QCCs") under international bank capital standards.  These standards allow banks to incur lower capital charges for derivatives cleared through QCCs.

The final rules include requirements relating to a number of areas of standards for SIDCOs, including governance, financial resources, system safeguards, special default rules, risk management, disclosure requirements, efficiency, and recovery and wind-down procedures.  Furthermore, the final rules include procedures by which derivatives clearing organizations other than SIDCOs may elect to become subject to these additional standards.

Read the CFTC press release

Read the CFTC rules

CFPB Issues Final Mortgage Disclosure Rules

On Wednesday, November 20, 2013, the Consumer Financial Protection Bureau (the "CFPB") issued final rules pursuant to Sections 1098 and 1100A of the Dodd-Frank Act.  The final rules amend Regulation X (Real Estate Settlement Procedures Act) and Regulation Z (Truth In Lending Act), establishing new disclosure requirements and forms for most consumer credit transactions secured by real property.  In addition, the final rules provide comprehensive guidance regarding compliance with the disclosure requirements.

Read the CFPB press release

Read the CFPB rules

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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