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News

SPEECHES & TESTIMONY

Statement of Chairman J. Christopher Giancarlo on Financial Stability Concerns regarding Brexit

https://www.cftc.gov/PressRoom/SpeechesTestimony/giancarlostatement120618?utm_source=govdelivery

December 6, 2018

The U.S. Commodity Futures Trading Commission (CFTC) continues to carefully monitor discussions between the United Kingdom (U.K.) and the other EU member states (EU27) regarding the U.K.’s exit from the European Union.  Uncertainty surrounding the effect of Brexit on the U.K. and EU27 financial markets is already having a substantial impact on entities and markets regulated by the CFTC.  If not dispelled, such uncertainty has the potential to create instability in the global derivatives market.  For this reason, we look forward to the U.K. and EU27 settling the terms of Brexit in a manner that provides sufficient legal and regulatory certainty to market participants so that European and international derivatives markets can continue to carry out their essential role in economic risk transfer essential to global economic growth.

I welcome recent statements from European authorities, including the European Commission (EC) and the European Securities and Market Authority (ESMA), that they will act to ensure EU market participants can continue to clear through U.K. central clearinghouses (CCPs) after March 29, 2019 in the case of a no-deal Brexit.  The EC’s decision to allow a “temporary and conditional” equivalence regime for U.K. CCPs, along with ESMA’s call for U.K. CCPs to apply for recognition, is a responsible first step in limiting the risk of market disruption.  These actions send an important message that European authorities do not wish the political discussions over Brexit to threaten the integrity and continued operation of markets for derivatives and other financial products.

More assurances, however, are still needed.  Derivatives market participants should have greater detail and clarity from European authorities on a full range of issues, including when the proposed equivalence decision for the U.K. and recognition decision for U.K. CCPs will be made, whether the equivalence and recognition decisions will apply to all cleared products or only to derivatives, and whether the equivalence and recognition decisions will apply to both new and existing cleared transactions.  Furthermore, the relevant legal and regulatory decisions made by European authorities should be for a reasonable duration and with limited conditions.  This additional clarity and certainty are necessary to limit substantial operational and market risks that will result from the sudden transfer of potentially trillions of euros in swap exposures in the remaining weeks before a possible no-deal Brexit.

Consistent with our regulatory mission, the CFTC stands ready to consider all necessary action including use of no action relief to provide certainty and clarity to participants in European derivatives markets.  We call on relevant U.K. and European authorities to take immediate and fully effective action to provide market participants with the necessary legal and regulatory certainty to manage their operations and activities after Brexit.

* * *

The U.S. Commodity Futures Trading Commission (CFTC) is the primary regulator of the U.S. derivatives market, which is the world’s largest derivatives market and is deeply interconnected with the markets in Europe, Asia and other regions.  U.S. market participants regulated by the CFTC are a major source of clearing capital and trading liquidity to European and other international markets.  The CFTC also regulates U.S. participation in the two largest derivatives clearinghouses in the United Kingdom.  The mission of the CFTC is to foster open, transparent, competitive, and financially sound markets.

 

RELEASE Number

7853-18

https://www.cftc.gov/PressRoom/PressReleases/7853-18

December 6, 2018

CFTC Wins Judgment against Commodities Trader for Commodity Pool Fraud, Including Misappropriating Funds

Washington, DC — The Commodity Futures Trading Commission (CFTC) announced today that Defendant Mark R. Slobodnik of Libertyville, Illinois, has been ordered to pay approximately $370,000 in fines in connection with a $1.76 million commodity pool fraud operated under the name Blue Guru, LLC.

Judge Manish Shah, of the U.S. District Court for the Northern District of Illinois, entered a Consent Order for Permanent Injunction on November 9, 2018 that requires Slobodnik to pay restitution totaling $280,000, disgorge $45,342.44 of ill-gotten gains and pay a civil monetary penalty of $45,342.44.  The Order also imposes a five year trading and registration ban on Slobodnik and prohibits him from violating provisions of the Commodity Exchange Act as charged.

The Order stems from a CFTC Complaint filed on January 12, 2018 (see CFTC Complaint and Press Release 7672-18), which charged Slobodnik, a former member of the Chicago Mercantile Exchange (CME), and co-defendants Richard D. Carter and Blue Guru, LLC with fraud, misappropriation and failing to register with the CFTC.  The Order finds that from April 2014 to the filing of the Complaint, Slobodnik willfully misrepresented material facts to participants and prospective participants of Blue Guru concerning the profits they were making on their participation interests in the commodity pool.  Among the misrepresentations, Slobodnik told prospective and actual participants that Blue Guru would use their money to trade futures, including the Dow Jones E-mini and the S&P 500 E-mini contracts on the CME, when, in fact, the defendants used less than two-thirds of the $1.76 million they solicited and received for trading.  According to the Order, Slobodnik informed prospective participants that they would earn 8 percent per year on their investment plus 50 percent of any gross net trading profits, and was present or aware of communications advising participants that their funds were earning consistent trading profits.  In fact, the Order finds that Slobodnik was responsible for approximately $249,000 of the $501,000 in trading losses incurred by Blue Guru.

The Order also finds that Slobodnik misappropriated $45,342.44 of participants’ funds and that when participants requested to withdraw their funds from Blue Guru, Slobodnik and his partner ignored their demands, engaged in delay tactics, and lied about conditions that purportedly prevented them from making disbursements.

Earlier in the litigation, Judge Shah entered an Order for Injunction, Civil Monetary Penalties, And Other Statutory and Equitable Relief Against Defendant Blue Guru, LLC by default on May 1, 2018 and ordered Blue Guru to pay restitution of $1,400,076.78, disgorgement of $1,400,076.78 and a civil monetary penalty of $4,200,230.34.  The case remains pending against Carter.

The CFTC cautions that Orders requiring repayment of funds to victims may not result in the recovery of any money lost because the wrongdoers may not have sufficient funds or assets.  The CFTC will continue to fight vigorously for the protection of customers and to ensure the wrongdoers are held accountable.

The CFTC thanks the U.S. Attorney’s Office for the Northern District of Illinois and the Federal Bureau of Investigation for their assistance.

CFTC Division of Enforcement staff members responsible for this action are Susan Gradman, Joseph Patrick, Brigitte Weyls, Scott Williamson and Rosemary Hollinger.

* * * * * *

CFTC’s Commodity Pool Fraud Advisory

The CFTC has issued several customer protection Fraud Advisories that provide the warning signs of fraud, including the Commodity Pool Fraud Advisory, which warns customers about a type of fraud that involves individuals and firms, often unregistered, offering investments in commodity pools.

Customers can report suspicious activities or information, such as possible violations of commodity trading laws, to the CFTC Division of Enforcement via a Toll-Free Hotline 866-FON-CFTC (866-366-2382) or file a tip or complaint online.

RELATED LINKS

Consent Order: Mark R. Slobodnik

 

RELEASE Number

7852-18

https://www.cftc.gov/PressRoom/PressReleases/7852-18

December 4, 2018

CFTC Commissioner Behnam Announces Members of the Market Risk Advisory Committee’s Interest Rate Benchmark Reform Subcommittee

Washington, DC — Commodity Futures Trading Commission (CFTC) Commissioner Rostin Behnam today announced the members of the Interest Rate Benchmark Reform Subcommittee (Subcommittee) of the CFTC’s Market Risk Advisory Committee (MRAC).  Commissioner Behnam is the sponsor of the MRAC.

Thomas Wipf, Vice Chairman of Institutional Securities at Morgan Stanley, will chair the 21-member Subcommittee, which is comprised of a wide range of industry participants that have a high-level of expertise and experience with interest rate benchmarks, as well as LIBOR transition efforts, including asset managers, exchanges, clearinghouses, end-users, intermediaries, market makers, service providers, swap execution facilities, and trade associations.

“I am grateful to all of the extremely qualified individuals who volunteered to join the Subcommittee.  I am confident this group of 21 members will thoughtfully fulfill the stated goals of the Subcommittee by providing the MRAC, and ultimately the Commission, with well-reasoned recommendations that will serve to both guide a smooth transition to a risk-free rate, and ultimately protect millions of American consumers from higher costs,” said Commissioner Behnam.

The Subcommittee was established to provide reports and recommendations to the MRAC regarding ongoing efforts to transition U.S. dollar derivatives and related contracts from LIBOR to a risk-free rate (RFR), the Secured Overnight Financing Rate (SOFR), and the impact of such transition on the derivatives markets.  Topics and issues this Subcommittee may consider include, but are not limited to, the following:

  • The treatment, under Title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act, of existing derivatives contracts that are amended to include new fallback provisions or otherwise reference RFRs such as SOFR and new derivatives contracts that reference RFRs; and
  • Impact on liquidity in derivatives and related markets during the transition.

See full list of MRAC Interest Rate Benchmark Reform Subcommittee members under Related Links.

RELATED LINKS

MRAC Interest Rate Benchmark Reform Subcommittee Members

 

RELEASE Number

7851-18

https://www.cftc.gov/PressRoom/PressReleases/7851-18

December 3, 2018

CFTC Allows Additional UK Multilateral Trading Facilities to Operate without CFTC Registration as Exempt SEFs  

Washington, DC — The Commodity Futures Trading Commission (CFTC) today issued an amended order that will allow an additional four multilateral trading facilities (MTFs) authorized within the European Union (EU) to be exempted from the requirement to register with the CFTC as swap execution facilities (SEFs).

The amended order exempts four United Kingdom-based MTFs – Creditex Brokerage LLP, Currenex, FX Connect, and Thomson Reuters – from SEF registration. These MTFs have been added to the CFTC’s original December 2017 order that exempted certain MTFs and organised trading facilities (OTFs) from the SEF registration requirement.

Under the December 2017 order, the CFTC allowed the European Commission to request that additional MTFs and OTFs, which satisfy certain legal requirements, be added to the list of MTFs and OTFs that were granted exempt SEF status under the order. Entities covered by the exemption are subject to certain continuing statutory standards and other requirements under the Commodity Exchange Act (CEA) and CFTC regulations.

CEA section 5h(g) provides that the CFTC may grant an exemption from SEF registration if it determines that a foreign facility is subject to comparable supervision and regulation by the appropriate governmental authorities in the facility’s home country.

The new MTFs bring the number of exempted MTFs and OTFs to 20 EU-authorized trading venues.

See amended order under Related Links.

RELATED LINKS

MTFs and OTFs Amendment To Appendix A to Order of Exemption

 

SPEECHES & TESTIMONY

Remarks of Commissioner Brian Quintenz at the 14th Annual China International Derivatives Forum (CIDF)

https://www.cftc.gov/PressRoom/SpeechesTestimony/opaquintenz18?utm_source=govdelivery

November 30, 2018
[Delivered in Shenzhen, China December 1, 2018]

Introduction

Thank you for that very warm welcome.  It is a great honor to join you today at the 14th Annual China International Derivatives Forum (CIDF) in Shenzhen.  I would like to thank Chairman Wang of the China Futures Association for inviting me and am grateful for the very productive dialogue with the China Securities Regulatory Commission Vice Chairman Fang Xinghai.  Before I begin, let me quickly say that the views contained in this speech are my own and do not represent the views of the Commodity Futures Trading Commission (Commission or CFTC).

I’d like to start today by telling a story about an important event in U.S. history.  It doesn’t have anything to do with the financial markets.  Yet, I believe it holds valuable lessons from which we can all learn about the conditions under which successful markets thrive.

December 2018 represents an anniversary of one of the United States’ great accomplishments.  This month marks the 50th anniversary of NASA’s Apollo 8 space mission, the first manned space craft to leave low Earth orbit, reach and orbit the Moon, and return safely to Earth.  Yet, its accomplishments were not what NASA originally intended, and its success was far from certain.

Apollo 8 was one of many distinct, sequenced missions which were designed to gradually test capabilities, processes and systems that would build up to landing a man safely on the moon and returning him home.  The mission’s original purpose within the planned sequence was only to orbit the Earth to test the Lunar module. However, upon learning that the Soviet Union was on the cusp of sending a mission to orbit the moon, on August 19, 1968 – just four months before the launch date – NASA changed Apollo 8’s mission to instead target that same objective.

In the intervening four months, NASA scientists worked tirelessly to solve intractable problems that had stymied past lunar missions.  At the same time, NASA employees’ progress was subject to intense scrutiny.  The loss of three astronauts in the tragic Apollo 1 fire in January 1967 was fresh in America’s psyche.  In the aftermath, Congress and the public demanded NASA take all necessary precautions to ensure this tragedy was never repeated.  As a result, NASA engineers were held to an incredibly high level of accountability, all while ferociously competing to make the advancements and improvements needed to transform Apollo 8 into a lunar mission.

Their efforts prevailed.  On December 21, 1968, Apollo 8 launched from Cape Canaveral, Florida, with three American astronauts onboard, and three days later, on Christmas Eve, the crew celebrated the first manned mission to orbit our celestial partner.[1]  During this groundbreaking mission, the Apollo 8 crew captured an iconic photograph, known today as Earthrise, which showed, in color, for the first time, the Earth emerging from behind the lunar horizon.  In reflecting upon the mission and that famous image, astronaut Bill Anders remarked that, despite all the crew’s training and preparation for exploring the moon, the crew ultimately ended up discovering Earth.[2]

Some of you may be asking yourself what the story of Apollo 8 has to do with global financial markets.  I think this story holds an important lesson for all of us.  I believe the combination of stringent competition paired with incredible accountability forced NASA to rise to new levels of excellence.  Failure would result in a loss of agency reputation, superpower inferiority, or worse, a loss of life. Corners could not be cut.  Every solution had to be precise, reliable, and elegant – but all of it had to be done under extreme time pressure.  Had that mixture of competition and accountability not been present, the result could have certainly been different.

The strongest financial markets are shaped by the same pressures.  People and businesses from across the world strenuously compete based on the merits of their products and services.  At the same time, strong markets are defined by accountability and fairness.  Poor performance is publically known.  Failed firms attach to their operators’ reputations.  And bad actors who commit fraud or impugn market integrity are prosecuted, and the law is applied transparently and without favor.

This combination, of fierce competition, stringent accountability, and legal certainty attracts investors, businesses, and capital.  I believe this has the been the experience of the American financial markets, including our futures markets, which I would humbly say, remain among the most dynamic and liquid, but yet still fastest growing, markets in the world.

Of course, while I believe the free market model results in the optimal outcome for societies, I recognize the wide range of views held on this topic, which has been fiercely debated over recent years, decades, and even centuries.  There is an ever-present tension between open, transparent markets and the natural self-interest of any nation to ensure the prosperity of its economy and people and to control downside risk.

Today I would like to discuss three primary things:  first, the important role derivatives play in supporting economic growth; second, why I believe the open access, principles-based regulatory model of the U.S. derivatives markets has been so successful; and third, the concrete steps taken here in China to achieve similar outcomes.

Derivatives Markets Support Economic Growth

Since the 2008 financial crisis, derivatives have been portrayed by some as inherently “risky.”  I take issue with this label.  All economic and investment endeavors have risk.  Yet, the derivatives markets actually present the powerful tools to manage and efficiently transfer risk to those market participants who are most efficient at bearing it.

At the macro level, derivatives boost economic growth and employment.  For example, between 2003 and 2012, one study estimates that the use of derivatives boosted employment and expanded economic activity in the U.S. by 1.1 percent, or $149.5 billion.[3]  But the use of derivatives also has implications at the micro level by providing individuals and families with stability; consumers do not have to worry about wild price swings in everyday household goods when they go to the store. Derivatives are vital to the health and growth of a country’s real economy in any number of ways, but two in particular stand out.

First, derivatives permit banks to extend more credit to the private sector, which spurs economic growth and investment in the real economy.  Derivatives bolster credit extension because they allow banks to protect themselves from their own market risks, thereby strengthening the bank’s own financial position and enabling greater lending to non-financial firms.  From 2003 to 2012, this same study found that banks’ increased extension of credit due to their derivatives hedging increased U.S. quarterly real GDP by about $2.7 billion each quarter.[4]

The second main driver of economic growth from derivatives use is allowing companies to smooth out cost structures, thereby promoting predicable cash flows that better allow for investments in growth.  The same study I just mentioned also found that commercial firms’ use of derivatives from 2003-2012 increased U.S. quarterly real GDP by about $1 billion by improving their ability to undertake capital investments.[5]  Non-financial firms that use derivatives have also been found to enjoy a lower cost of capital and increased expected cash flows, all factors that increase the firm’s value and spur expansion.[6]  In other words, derivatives enable businesses to focus on and expand their core activities, because they can hedge more peripheral risks.  It should be no surprise that a 2009 survey found that 92% of the world’s 500 largest companies managed their price risk using derivatives.[7]

Derivatives also help nations manage their own credit risks.  One recent study found that the availability of credit default swaps (CDS) trading on any nation’s sovereign bonds actually lowered those countries’ cost of debt.[8]  In fact, the borrowers who experienced the biggest cost reductions were those with the highest default risk.[9]

On the whole, I believe that derivatives hold great social and economic value for society.  A diverse, liquid and predictably regulated derivatives marketplace best allows that activity to occur.

The U.S. futures market has a number of attributes which I believe help it thrive.

Regulation of U.S. Futures Markets

In my opinion, there are three characteristics of the U.S. futures markets that have significantly contributed to their resiliency, vitality, and efficiency:  participant diversity, customer protection, and the promotion of market integrity through principles-based regulations.

Participant Diversity.  The U.S. futures markets are used by market participants around the world to hedge their risks.  This policy of open participation has increased liquidity, particularly in times of stress, which allows companies to engage with the market even during periods of intense volatility.  It also means that the pool of participants is quite diverse; a variety of commercial hedgers – with different exposures, timelines, and specifications – along with a variety of speculators – with different strategies, information flows, and analytical judgements – from across the globe can trade the contracts listed on our exchanges and, through their various perspectives and market interactions, create a robust price discovery mechanism.

Diversity within large liquidity pools gives the pool strength, similar to diversity within environmental ecosystems.  As ecosystems become fragmented or increasingly uniform, their ability to adapt to adverse conditions is impaired, which increases their vulnerability to new predators or disease.[10]  The same is true for financial markets.  The strongest, most resilient markets are integrated and diverse.  These markets are best able to withstand market shocks and economic downturns.  I believe that is one of the reasons why the U.S. futures markets performed so well during the financial crisis.[11]

Customer Protection.  Secondly, the legal regime underlying the U.S. futures markets provides strong customer protections.  Both the CFTC and the exchanges themselves police the markets for fraud, abuse, and manipulation.[12]  In addition to these basic market protections, one of the bedrock principles of CFTC futures regulation is the protection of customer funds.  Futures brokers, known as futures commission merchants (FCMs) in the U.S., must always hold customer funds segregated from their own assets.[13]  FCMs are prohibited from using customer funds for their own benefit or for the benefit of another futures customer.[14]  CFTC regulations also provide market participants with certainty about how their funds will be treated in the event of a default by another FCM customer or the FCM itself.  The legal certainty of customer funds’ treatment in bankruptcy promotes the confidence in, and therefore the use of, the U.S. futures markets.

Market Integrity and Principles-Based Regulation.  In addition to ensuring the markets remain free from fraud and market manipulation, one of the CFTC’s core responsibilities is to promote futures markets that reflect supply and demand fundamentals.[15]  While volatility can present challenges for regulators, including potentially intense political pressure to intervene in markets, I believe the choice between controlling volatility and promoting market integrity is zero sum.  The more a regulator chooses to limit participation, speculation, or two-sided price action in an effort to control the market’s movements, the less that regulator allows the market to find a clearing price.

The CFTC is not immune to such conversations.  The establishment of the agency’s precursor, called the Commodity Exchange Commission, in the 1930s was in response to price volatility and the suspicion that speculative activity was its contributing cause.[16]  Even today, there are still debates between different political philosophies on the need to limit speculative activity to protect markets as opposed to the, in my mind, better view that speculative activity provides counterparties and liquidity for natural hedgers and that only a narrow set of this speculative activity may raise concerns of manipulation.[17]

In my mind, the CFTC has seen its greatest success when it maintains its long-standing principles-based approach to regulation, as opposed to a rules-based or prescriptive regulatory approach that is seen in some other jurisdictions.  A principles-based approach has a number of advantages over a prescriptive approach:  it not only allows each market participant to develop internal rules appropriate to its unique business model or marketplace, but principles-based regulation also allows market participants to be individually responsive to market dynamics.  Lastly, enforcing principles as opposed to prescriptive rules encourages the regulator to have a cooperative and informed relationship with its registrants. We may take the view that a market participant is failing to meet certain regulatory principles, but in order to make such a determination, we must have a detailed understanding of their business and marketplace.

As China continues to develop its regulatory concepts, I would strongly encourage such an approach to futures market regulation.

Growth of China’s Futures Markets

Speaking of China, the U.S. is certainly not the only country with growing, vibrant futures markets.  Almost 30 years ago, futures trading began in the Zhengzhou, Henan Province on the China Zhengzhou Grain Wholesale Market.  Since then, the Chinese futures markets have experienced incredible growth.  In 2017, China’s four futures exchanges – the Dalian Commodity Exchange, the Shanghai Futures Exchange, the Zhengzhou Commodity Exchange and the China Financial Futures Exchange – all ranked among the top derivative exchanges in the world by trade volume.[18]  In 2017, China’s three domestic physical commodities exchanges accounted for over 90% of the volumes traded in the Asia-Pacific region.[19]  Many of the world’s most heavily traded energy, metals, and agricultural futures and options contracts are found on these three exchanges.[20]

The rapid growth of China’s futures markets has been essential to its broader economic growth.  As the largest consumer of raw commodities in the world, and one of the largest manufacturers, it is imperative that domestic Chinese businesses are able to easily and effectively hedge their commodity price risk.[21]  To that end, I think that China’s recent steps to internationalize its futures markets will further spur their growth and give local businesses a larger, more diverse liquidity pool to manage risk.

In the past, due to numerous restrictions, it has generally been very difficult for foreign entities to access China’s domestic financial markets.  But more recently, we have seen incremental steps taken to encourage the liberalization of China’s financial markets.  For example, this past March, the Shanghai International Energy Exchange launched a yuan-denominated crude oil futures contract open to non-Chinese market participants to trade directly for the first time.[22]  In another first, this past August, the China Securities Regulatory Commission authorized foreign companies to hold majority ownership of domestic futures and securities firms, with a commitment to abolish the foreign ownership cap altogether after three years.[23]

I applaud these market reforms.  I believe that greater, more diverse participation in China’s domestic futures markets from both domestic and overseas participants will increase liquidity, reduce volatility, and make it easier for local Chinese businesses to hedge their risks and invest in growth.

Conclusion

Since the iconic photo of Earth rising behind the Moon was first taken, space exploration has marched on.  We now have the first photo of Earth from Mars (2003), the first photo of a planet beyond our solar system (2004), and, most recently, the first photo of an exploding supernova (2018).  During that time, remarkable advances have also been made in technology, medicine, the arts, and our financial markets.

The mission of Apollo 8 was 50 years ago, but the competitive and accountable environment which produced such incredible results are ever present in our global financial markets.  As China’s domestic futures markets continue to grow, I welcome the opportunity for greater participation by outside investors, including American firms, and hope to engage with you on a regulatory approach that provides the greatest price transparency and participant diversity.

[1]     Apollo 8, NASA (last updated July 9, 2018), https://www.nasa.gov/mission_pages/apollo/missions/apollo8.html.

[2]     Apollo 8: Christmas at the Moon, NASA (lasted updated Aug. 7, 2017), https://www.nasa.gov/topics/history/features/apollo_8.html.

[3]     MILKEN INSTITUTE, DERIVING THE ECONOMIC IMPACT OF DERIVATIVES:  GROWTH THROUGH RISK MANAGEMENT 1 (2014), https://www.cmegroup.com/education/files/growth-through-risk-management.pdf(hereinafter Milken Report).

[4]     Id.  These real GDP statistics reflect inflation-adjusted values as calculated in 2014.

[5]     Id.

[6]     Id. at 45.  See also Söhnke M. Bartram, Gregory W. Brown and Jennifer Conrad, The Effects of Derivatives on Firm Risk and Value, 46 J. of Fin. and Quantitative Analysis 967-999, 972 (Aug. 2011) (“Our results suggest, at a minimum, that firms reduce cash flow risk, total risk, and systematic risk significantly through financial risk management with derivatives.  This result is robust to controlling for differences in a large number of firm characteristics, as well as differences in country and industry.”).

[7]     INTERNATIONAL SWAPS AND DERIVATIVES ASSOCIATION (ISDA), 2009 ISDA DERIVATIVES USAGE SURVEY (2009), https://www.isda.org/a/SSiDE/isda-research-notes2.pdf.

[8]     Iuliana Ismailescu and Blake Phillips, Credit Default Swaps and the Market for Sovereign Debt, 52 J. of Banking and Fin. 43-61 (2015).

[9]     Id. at 58.  See also CFTC Chairman J. Christopher Giancarlo Response to Bollettino (July 21, 2018), https://www.cftc.gov/PressRoom/SpeechesTestimony/giancarloresponsetobollettino072118.

[10] Raphael K. Didham, The University of Western Australia & CSIRO Ecosystem Sciences, The Ecological Consequences of Habitat Fragmentation (2010) ; see also Keynote Address of CFTC Commissioner J. Christopher Giancarlo before the ISDA’s Trade Execution Legal Forum (Dec. 9, 2016), https://www.cftc.gov/PressRoom/SpeechesTestimony/opagiancarlo-18.

[11]    ROBERT W. KOLB AND JAMES A. OVERDAHL, FINANCIAL DERIVATIVES: PRICING AND RISK MANAGEMENT 244 (2009) (“Futures markets performed well during the crisis, and (as had been the case for many decades) there were no defaults or serious problems associated futures clearinghouses in 2008.”).

[12]    CEA Section 3(b); Section 5(d)(2)-3; Section 5d(12).

[13]    CEA Section 4d(a)(2.)

[14]    Id.

[15]    CEA Section 3(a) (noting that transactions subject to the CEA “are affected with a national public interest by providing a means for managing and assuming price risks, discovering prices, or disseminating pricing information through trading in liquid, fair and financially secure trading facilities”); CEA Section 3(b) (“[I]t is further the purpose of this Act to deter and prevent price manipulation or any other disruptions to market integrity; to ensure the financial integrity of all transactions subject to this Act and the avoidance of systemic risk…”).

[16]    Position Limits and the Hedge Exemption, Brief Legislative History, Testimony of General Counsel Dan M. Berkovitz, Commodity Futures Trading Commission (July 28, 2009), https://www.cftc.gov/PressRoom/SpeechesTestimony/berkovitzstatement072809#P20_5917.

[17]    Remarks of Commissioner Brian Quintenz before the Commodity Markets Council State of the Industry 2018 Conference (Jan. 29, 2018), https://www.cftc.gov/PressRoom/SpeechesTestimony/opaquintenz5.

[18]    Futures Industry Association (FIA), 2017 Annual Volume Survey (Jan. 24, 2018), https://fia.org/file/7119/download?token=FQ1_cUWh.

[19]    WORLD FEDERATION OF EXCHANGES (WFE),WFE IOMA 2017 DERIVATIVES REPORT 27 (April 2018), https://www.world-exchanges.org/storage/app/media/files/ioma_derivatives_market_survey/2017%20IOMA%20Derivatives%20Market%20Survey.pdf.

[20] Raphael K. Didham, The University of Western Australia & CSIRO Ecosystem Sciences, The Ecological Consequences of Habitat Fragmentation (2010) ; see also Keynote Address of CFTC Commissioner J. Christopher Giancarlo before the ISDA’s Trade Execution Legal Forum (Dec. 9, 2016), https://www.cftc.gov/PressRoom/SpeechesTestimony/opagiancarlo-18.

[21]    Darrell M. West and Christian Lansang, The Brookings Institution, Global Manufacturing Scorecard: How the US Compares to 18 Other Nations, (July 10, 2018), https://www.brookings.edu/research/global-manufacturing-scorecard-how-the-us-compares-to-18-other-nations/.

[22]    Global Trading Giants Dip Toes in China Oil Futures on Debut Day, BLOOMBERG NEWS (March 26, 2018), https://www.bloomberg.com/news/articles/2018-03-26/china-s-first-ever-yuan-oil-futures-begin-trading-in-shanghai.

[23] Measures for Administration of Foreign Investment in Futures Companies, CHINA SECURITIES REG. COMM., Decree No. 149; promulgated and effective 24 Aug. 2018, http://www.csrc.gov.cn/pub/csrc_en//laws/rfdm/DepartmentRules/201811/P020181107362813946307.pdf; Measures for Administration of Foreign Investment in Securities Companies, CHINA SECURITIES REG. COMM., Decree No. 140; promulgated and effective 28 Apr. 2018, http://www.csrc.gov.cn/pub/csrc_en//laws/rfdm/DepartmentRules/201811/P020181107362569572581.pdf.

 

RELEASE Number

7850-18

https://www.cftc.gov/PressRoom/PressReleases/7850-18

November 30, 2018

CFTC Approves a Proposed Rule to Provide Exception to Annual Privacy Notice Requirement

Washington, DC — The Commodity Futures Trading Commission (CFTC) today approved a proposed rule to revise a CFTC regulation that requires certain futures commission merchants, retail foreign exchange dealers, commodity trading advisors, commodity pool operators, introducing brokers, major swap participants, and swap dealers to provide annual privacy notices to customers. Under the proposed rule these annual privacy notices would no longer be required where certain conditions are satisfied.

CFTC staff worked with staff from the Bureau of Consumer Financial Protection (Bureau) to ensure that the proposal is consistent with rules recently finalized by the Bureau.  In addition, CFTC staff consulted with the Securities and Exchange Commission, the Federal Trade Commission, and the National Association of Insurance Commissioners on the revisions to CFTC regulation 160.5.

The comment period ends 60 days after the proposal’s publication in the Federal Register.

 

 

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