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.
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.
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