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.
Two different U.S. derivatives exchanges have issued early January 2019 notices of disciplinary action against market participants who engaged in non-compeititve trading.
On December 11, 2018, the CFTC issued its Request for Input on Crypto-Asset Mechanics and Markets (“RFI”) seeking public comment and feedback on the “technology, mechanics, and markets for virtual currencies beyond Bitcoin, namely Ether and its use on the Ethereum Network.” The RFI was made in furtherance of the CFTC’s LabCFTC initiative and seeks information to “better inform the Commission and its operating divisions as the market evolves and potentially seeks to list new virtual currency-based futures and derivatives products.”
“It is not illegal to be smarter than your counterparties in a swap transaction, nor is it improper to understand a financial product better than the people who invented the product.” So wrote Judge Sullivan nearly two years after the bench trial in CFTC v. DRW, in entering judgment in favor of the Defendants on all of the CFTC’s market manipulation claims. The long-anticipated decision is a significant setback for the CFTC’s anti-manipulation campaign.
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