Commodity-Corner.com is a Murphy & McGonigle resource for those interested in legal developments in the commodities, futures, and derivatives area. The information provided by this site is intended to provide insightful analysis and perspectives, as well as regulatory and enforcement updates and trends, in this increasingly varied and complex industry.
On November 5, 2018, the Commodity Futures Trading Commission (“Commission” or “CFTC”) voted 4-1 to propose sweeping changes to its regulations relating to swap execution facilities (“SEFs”) and the trade execution requirement under the Commodity Exchange Act (“Act”). This article summarizes the proposed modifications to the SEF regulatory framework and trade execution requirement.
On November 15, 2018, the CFTC’s Division of Enforcement released its Annual Report for Fiscal Year 2018. This article provides an in-depth and comprehensive analysis of the Division’s FY 2018 enforcement campaign, with predictions of trends and developments for the coming year.
Over the past week, regulators in both the United Kingdom and Hong Kong have voiced words of caution regarding varying virtual assets. Both regulators were concerned in particular about the integrity of the cash markets for virtual assets and products giving retail investors both direct and indirect exposure to virtual assets.
More than $45 million in recent awards should remind businesses to proactively look within and implement effective whistleblower programs to protect themselves from potential enforcement actions.
This past week has seen two novel developments in the spoofing theories of the U.S. Commodity Futures Trading Commission. The first involves alleging that orders placed on a foreign market that were immediately canceled after the fill of an order on a U.S. exchange (and vice versa) constitute violations of the Commodity Exchange Act and CFTC regulations. The second involves allegations that a trader’s mere flashing of large orders — posting and then quickly canceling orders — without placing a genuine order on the opposite side of the market violates the CEA’s anti-disruptive trading provisions.
On March 13, 2019, the Senate Agriculture Committee held its hearing on the nomination of Dr. Heath Tarbert to replace current CFTC Chairman J. Christopher Giancarlo, whose term is set to expire in mid-April. Tarbert currently serves as the Assistant Secretary for Institutional Markets at the Treasury Department. With indications of bipartisan support for his nomination, Tarbert is widely expected to be confirmed and to arrive at the CFTC this summer. The hearing provided insights into what is in store for the CFTC’s regulatory and enforcement regimes under Tarbert’s watch.
CFTC Director of Enforcement James McDonald offered remarks detailing the agency’s intention to investigate “violations of the CEA carried out through foreign corrupt practices.” On the same day, the CFTC issued an Enforcement Advisory related to “Self Reporting and Cooperation for CEA Violations Involving Foreign Corrupt Practices.”
The European Union (“EU”) on Monday, February 25, 2019, agreed to give providers of “critical benchmarks” (e.g., Euribor or EONIA) an additional two years (to December 31, 2021) to comply with the EU’s new benchmark regulation requirements.
On February 7, 2019, the International Organization of Securities Commissions released its final report on Commodity Storage and Delivery Infrastructures: Good or Sound Practices. The Report, which builds upon the findings IOSCO made in its 2016 The Impact of Storage and Delivery Infrastructure on Derivatives Market Pricing report, suggests that regulated bodies such as trading venues and central counterparties, in conjunction with the storage facilities they use for the physical delivery of derivatives that the exchanges and CCPs trade and clear, adopt enhanced practices in the areas of oversight, transparency, fees and conflicts of interest.
On February 13, 2019, the Commodity Futures Trading Commission’s Division of Market Oversight stayed an ICE Futures U.S., Inc. self-certified rule amendment that is designed to build in a delay of the execution of resting, passive orders in the exchange’s gold and silver futures contracts because, in the view of the Division of Market Oversight, the rule amendment poses new and novel issues.
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