Commodity Futures Trading Commission – Federal Register Recent Federal Regulation Documents

In compliance with the Paperwork Reduction Act, this notice announces that the Information Collection Request (ICR) abstracted below has been forwarded to the Office of Management and Budget (OMB) for review and comment. The ICR describes the nature of the information collection and its expected costs and burden.

The Commodity Futures Trading Commission (``CFTC'' or ``Commission'') is adopting a final rule to implement Section 619 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the ``Dodd-Frank Act''), which contains certain prohibitions and restrictions on the ability of a banking entity and nonbank financial company supervised by the Board of Governors of the Federal Reserve System (the ``Board'') to engage in proprietary trading and have certain interests in, or relationships with, a hedge fund or private equity fund. Section 619 also requires the Board, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, and the Securities and Exchange Commission to also issue regulations implementing section 619 and directs the CFTC and those four agencies to consult and coordinate with each other, as appropriate, in developing and issuing the implementing rules, for the purposes of assuring, to the extent possible, that such rules are comparable and provide for consistent application and implementation. To that end, although the Commission is adopting a final rule that is not a joint rule with the other agencies, the CFTC and the other agencies have worked closely together to develop the same rule text and supplementary information, except for information specific to the CFTC or the other agencies, as applicable. In particular, the CFTC's final rule is numbered as part 75 of the Commission's regulations, the rule text refers to the ``Commission'' instead of the ``[Agency]'' and one section of the regulations addresses authority, purpose, scope, and relationship to other authorities with respect to the Commission. Furthermore, it is noted that the supplementary information generally refers to the ``Agencies'' collectively when referring to deliberations and considerations in developing the final rule by the CFTC together with the other four agencies and references to the ``final rule'' should be deemed to refer to the final rule of the Commission as herein adopted.

On September 12, 2013, the Commodity Futures Trading Commission (``Commission'') published in the Federal Register a Concept Release on Risk Controls and System Safeguards for Automated Trading Environments (``Concept Release''). The Concept Release addresses the evolution from human-centered to automated trading environments and seeks comment on a series of pre-trade risk controls, post-trade measures, system safeguards and other protections applicable to trading platforms and other categories of market participants. Its original comment period closed on December 11, 2013. For the reasons set forth below, the Commission is reopening the comment period for the Concept Release beginning on January 21, 2014. Interested parties may submit comments on or before February 14, 2014.

On November 15, 2013, the Commodity Futures Trading Commission (``Commission'') published in the Federal Register a notice of proposed rulemaking (the ``Aggregation Proposal'') to amend existing regulations setting out the Commission's policy for aggregation under its position limits regime. On the same day that the Commission adopted the Aggregation Proposal, it also adopted a proposal to establish speculative position limits for the 28 exempt and agricultural commodity futures and options contracts and the physical commodity swaps that are economically equivalent to such contracts that previously had been covered by part 151 of its regulations (the ``Position Limits Proposal''). However, the Position Limits Proposal was not published in the Federal Register until December 12, 2013. Because the comment period for both proposals was 60 days after publication in the Federal Register, the comment period for the Position Limits Proposal runs to a later date than the comment period for the Aggregation Proposal. In order to provide interested parties with an opportunity to comment on the Aggregation Proposal for so long as the comment period on the Position Limits Proposal is open, the Commission is extending the comment period for the Aggregation Proposal so that it ends at the same time as the comment period for the Position Limits Proposal.

The Commodity Futures Trading Commission (``Commission'') is requesting comment on an advisory issued by Commission staff on November 14, 2013 (the ``Staff Advisory''), regarding the applicability of certain Commission regulations to the activity in the United States of swap dealers (``SDs'') and major swap participants (``MSPs'') registered with the Commission that are established in jurisdictions other than the United States (whether an affiliate or not of a U.S. person, a ``non-U.S. SD'' or ``non-U.S. MSP'').

The following is the analysis and determination of the Commodity Futures Trading Commission (``Commission'') regarding certain parts of a joint request by the European Commission (``EC'') and the European Securities and Markets Authority (``ESMA'') that the Commission determine that laws and regulations applicable in the European Union (``EU'') provide a sufficient basis for an affirmative finding of comparability with respect to the following regulatory obligations applicable to swap dealers (``SDs'') and major swap participants (``MSPs'') registered with the Commission: (i) swap trading relationship documentation; (ii) swap portfolio reconciliation and compression; (iii) trade confirmation; and (iv) daily trading records (collectively, the ``Business Conduct Requirements'').

The following is the analysis and determination of the Commodity Futures Trading Commission (``Commission'') regarding certain parts of a joint request by the Canadian Bankers Association (``CBA''), five individual Canadian banks provisionally-registered with the Commodity Futures Trading Commission (``Commission'') as swap dealers (``SDs''), and the Office of the Superintendent of Financial Institutions (``OSFI'') that the Commission determine that certain laws and regulations applicable in Canada provide a sufficient basis for an affirmative finding of comparability with respect to the following regulatory obligations applicable to SDs and major swap participants (``MSPs'') registered with the Commission: (i) Chief compliance officer; (ii) risk management; and (iii) swap data recordkeeping (collectively, the ``Internal Business Conduct Requirements'').

The following is the analysis and determination of the Commodity Futures Trading Commission (``Commission'') regarding certain parts of a request by the Bank of Tokyo-Mitsubishi UFJ, Ltd (``BTMU'') that the Commission determine that laws and regulations applicable in the Japan provide a sufficient basis for an affirmative finding of comparability with respect to the following regulatory obligations applicable to swap dealers (``SDs'') and major swap participants (``MSPs'') registered with the Commission: (i) Swap trading relationship documentation and (ii) daily trading records (collectively, the ``Business Conduct Requirements'').

The following is the analysis and determination of the Commodity Futures Trading Commission (``Commission'') regarding certain parts of a request by the Hong Kong Monetary Authority (``HKMA'') that the Commission determine that laws and regulations applicable in Hong Kong provide a sufficient basis for an affirmative finding of comparability with respect to the following regulatory obligations applicable to swap dealers (``SDs'') and major swap participants (``MSPs'') registered with the Commission: (i) Chief compliance officer; (ii) risk management; and (iii) swap data recordkeeping (collectively, the ``Internal Business Conduct Requirements'').

The Commodity Futures Trading Commission (CFTC) is announcing an opportunity for public comment on the extension of a proposed collection of certain information by the agency. In compliance with the Paperwork Reduction Act of 1995 (PRA), (44 U.S.C. 3501 et seq.), Federal agencies are required to publish notice in the Federal Register concerning each proposed collection of information, including each proposed extension of an existing collection of information, and to allow 60 days for public comment in response to the notice. This notice solicits comments, as described below, on the proposed Information Collection Request (ICR) titled: Part 41, Relating to Security Futures Products; OMB Control Number 3038-0059.

The Commission proposes to amend regulations concerning speculative position limits to conform to the Wall Street Transparency and Accountability Act of 2010 (``Dodd-Frank Act'') amendments to the Commodity Exchange Act (``CEA'' or ``Act''). The Commission proposes to establish speculative position limits for 28 exempt and agricultural commodity futures and option contracts, and physical commodity swaps that are ``economically equivalent'' to such contracts. In connection with establishing these limits, the Commission proposes to update some relevant definitions; revise the exemptions from speculative position limits, including for bona fide hedging; and extend and update reporting requirements for persons claiming exemption from these limits. The Commission proposes appendices that would provide guidance on risk management exemptions for commodity derivative contracts in excluded commodities permitted under the proposed definition of bona fide hedging position; list core referenced futures contracts and commodities that would be substantially the same as a commodity underlying a core referenced futures contract for purposes of the proposed definition of basis contract; describe and analyze fourteen fact patterns that would satisfy the proposed definition of bona fide hedging position; and present the proposed speculative position limit levels in tabular form. In addition, the Commission proposes to update certain of its rules, guidance and acceptable practices for compliance with Designated Contract Market (``DCM'') core principle 5 and Swap Execution Facility (``SEF'') core principle 6 in respect of exchange- set speculative position limits and position accountability levels.

The Commodity Futures Trading Commission (``Commission'') is adopting final regulations to establish additional standards for compliance with the derivatives clearing organization (``DCO'') core principles set forth in the Commodity Exchange Act (``CEA'') for systemically important DCOs (``SIDCOs'') and DCOs that elect to opt-in to the SIDCO regulatory requirements (``Subpart C DCOs''). Pursuant to the new regulations, SIDCOs and Subpart C DCOs are required to comply with the requirements applicable to all DCOs, which are set forth in the Commission's DCO regulations on compliance with core principles, to the extent those requirements are not inconsistent with the new requirements set forth herein. The new regulations include provisions concerning: procedural requirements for opting in to the regulatory regime as well as substantive requirements relating to governance, financial resources, system safeguards, special default rules and procedures for uncovered losses or shortfalls, risk management, additional disclosure requirements, efficiency, and recovery and wind- down procedures. These additional requirements are consistent with the Principles for Financial Market Infrastructures (``PFMIs'') published by the Committee on Payment and Settlement Systems and the Board of the International Organization of Securities Commissions (``CPSS-IOSCO''). In addition, the Commission is adopting certain delegation provisions and certain technical clarifications.

On May 30, 2012, the Commodity Futures Trading Commission (``Commission'' or ``CFTC'') published in the Federal Register a notice of proposed modifications to part 151 of the Commission's regulations. The modifications addressed the policy for aggregation under the Commission's position limits regime for 28 exempt and agricultural commodity futures and options contracts and the physical commodity swaps that are economically equivalent to such contracts. In an Order dated September 28, 2012, the District Court for the District of Columbia vacated part 151 of the Commission's regulations. The Commission is now proposing modifications to the aggregation provisions of part 150 of the Commission's regulations that are substantially similar to the aggregation modifications proposed to part 151, except that the modifications address the policy for aggregation under the Commission's position limits regime for futures and option contracts on nine agricultural commodities set forth in part 150. Separately, the Commission is also proposing today to establish speculative position limits for the 28 exempt and agricultural commodity futures and options contracts and the physical commodity swaps that are economically equivalent to such contracts that previously had been covered by part 151 of its regulations. If both proposals are finalized, the modifications proposed here to the aggregation provisions of part 150 would apply to the position limits regimes for both the futures and option contracts on nine agricultural commodities and the 28 exempt and agricultural commodity futures and options contracts and the physical commodity swaps that are economically equivalent to such contracts. However, the Commission may determine to adopt the modifications proposed here separately from any other amendment to the position limits regime.

The Commodity Futures Trading Commission (the ``Commission'') is issuing final rules implementing new statutory provisions enacted by Title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the ``Dodd-Frank Act''). Specifically, the final rule contained herein imposes requirements on swap dealers (``SDs'') and major swap participants (``MSPs'') with respect to the treatment of collateral posted by their counterparties to margin, guarantee, or secure uncleared swaps. Additionally, the final rule includes revisions to ensure that, for purposes of subchapter IV of chapter 7 of the Bankruptcy Code, securities held in a portfolio margining account that is a futures account or a Cleared Swaps Customer Account constitute ``customer property''; and owners of such account constitute ``customers.''