CFTC and JFSA Announce Comparability of Derivatives Trading Venues
CFTC announced the issuance of an order exempting certain derivatives trading facilities (electronic trading platforms, or ETPs) regulated by JFSA from the requirement to register with CFTC as swap execution facilities (SEFs). JFSA also announced that it would facilitate the authorization process of "Authorized Electronic Over-the-Counter (OTC) Derivatives Transactions etc. Business Operators" (Foreign ETP Operators) for CFTC-authorized derivative platforms that seek to be Foreign ETP Operators on the premise that such entities are subject to the regulation and supervision of CFTC.
The Commodity Exchange Act (CEA) section 5h(g) empowers CFTC to grant an exemption from the SEF registration requirement when it determines that a facility is subject to comparable, comprehensive supervision and regulation on a consolidated basis by SEC, a prudential regulator, or the appropriate governmental authorities in the home country of the facility. ETPs that have been granted an exemption from SEF registration under section 5h(g), as listed in the order, may be used by swap counterparties to comply with the trade execution requirement under the CEA section 2(h)(8) and may also be used to trade swaps that are not subject to the trade execution requirement.
Article 60-14 of the Financial Instruments and Exchange Act (No. 25 of 1948) (FIEA) empowers JFSA to permit certain foreign derivatives platforms to qualify as Foreign ETP Operators. Under the Japanese regulatory framework, Foreign ETP Operators shall not be examined on the specific ways they operate as long as their business is operated at levels deemed virtually equal to those required in Japan, given that they are essentially under the supervision of overseas authorities. JFSA will facilitate the authorization process for CFTC-authorized derivatives platforms that seek to be Foreign ETP Operators on the premise that they are subject to the regulation and supervision of the CFTC.
Keywords: Americas, Asia Pacific, US, Japan, Banking, Securities, Swap Execution, Trading Venues, OTC Derivatives, JFSA, CFTC
Related Articles
EIOPA Report Analyzes Use and Impact of Long-Term Guarantee Measures
EIOPA submitted—to the European Parliament, the Council of the European Union, and EC—its 2020, fifth, and last annual report on long-term guarantee measures and measures on equity risk.
BIS, SNB, and SIX Announce Successful Completion of CBDC POC
The BIS Innovation Hub Swiss Centre, SNB, and the financial infrastructure operator SIX announced the successful completion of a joint proof-of-concept (PoC) experiment as part of the Project Helvetia.
EBA Sets Out Treatment of Certain Banking Book Positions Under FRTB
EBA published the final draft regulatory technical standards for calculation of own funds requirements for market risk, under the standardized and internal model approaches of the Fundamental Review of the Trading Book (FRTB) framework.
EIOPA Consults on Integrating Climate Change into SII Standard Formula
EIOPA published discussion paper on a methodology for the potential inclusion of climate change in the Solvency II (sometimes also written as SII) standard formula when calculating natural catastrophe underwriting risk.
EU Issues Corrigenda to Investment Firms Directive and Regulation
EU published, in the Official Journal of the European Union, corrigenda to the Directive and the Regulation on the prudential requirements and supervision of investment firms.
MAS Proposes Changes to Rules Arising from Banking Amendment Act
MAS proposed amendments to certain regulations, notices, and guidelines arising from the Banking (Amendment) Act 2020.
PRA to Elaborate on Approach to Transposition of CRD5 by Mid-December
PRA published a statement that explains when to expect further information on the PRA approach to transposing the Capital Requirements Directive (CRD5), including its approach to revisions to the definition of capital for Pillar 2A.
RBNZ Consults on Aspects of Insurance Act, Solvency Standards & IFRS17
RBNZ launched consultations on the scope of the Insurance Prudential Supervision Act (IPSA) 2010 and on the associated Insurance Solvency Standards.
SRB Sets Out Work Program for 2021-2023
SRB published the work program for 2021-2023, setting out a roadmap to further operationalize the Single Resolution Fund and to achieve robust resolvability of banks under its remit over the next three years.
EIOPA Consults on KPIs on Sustainability for Non-Financial Reporting
EIOPA is consulting on the relevant ratios to be mandatorily disclosed by insurers and reinsurers falling within the scope of the Non-Financial Reporting Directive as well as on the methodologies to build these ratios.
