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 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.
For the first time, the CFTC published its Examination Priorities for its Division of Market Oversight (“DMO”), Division of Swap Dealer & Intermediary Oversight (“DSIO”), and Division of Clearing & Risk (“DCR”). The agency’s announcement referenced the more detailed four-page 2019 Compliance Branch Examination Priorities of DMO’s Compliance Branch, and briefly summarized the priorities of DSIO and DCR. Chairman Giancarlo commented that the publication of these examination priorities was intended to improve the relationship between the CFTC and the entities that it regulates while promoting a culture of compliance at its registrants. The priorities, most notably those of the DMO’s Compliance Branch, provide some insight as to where the agency’s examination focus will be during 2019.
On February 1, 2019, a Manhattan federal court judge tossed out a consolidated class action against Effex Capital, LLC and John Dittami on the grounds that the plaintiffs’ allegations of wrongdoing “were lifted nearly verbatim from [a] CFTC settlement” to which Effex and Dittami were not parties.
On January 31, 2019, the Commodity Futures Trading Commission issued a speaking order simultaneously setting forth and settling allegations that Chicago resident, Kevin Crepeau, spoofed the Chicago Board of Trade’s soybean, soybean meal and soybean oil futures contracts from August 2013 through June 2016.
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