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
Previous Article
BoE Report on Evaluation of Approach to Concurrent Stress TestingRelated Articles
PRA Finalizes Approach to Supervision of International Banks
In a recent Market Notice, the Bank of England (BoE) confirmed that green gilts will have equivalent eligibility to existing gilts in its market operations.
FCA Issues PS21/9 on Implementation of Investment Firms Regime
The Financial Conduct Authority (FCA) published the policy statement PS21/9 on implementation of the Investment Firms Prudential Regime.
EBA Proposes Regulatory Standards to Identify Shadow Banking Entities
The European Banking Authority (EBA) proposed regulatory technical standards that set out criteria for identifying shadow banking entities for the purpose of reporting large exposures.
IOSCO Proposes Recommendations on ESG Ratings and Data Providers
The Board of the International Organization of Securities Commissions (IOSCO) proposed a set of recommendations on the environmental, social, and governance (ESG) ratings and data providers.
EC to Defer Application of SFDR Standards Till July 2022
The European Commission (EC) announced plans to defer the application of 13 regulatory technical standards under the Sustainable Finance Disclosure Regulation (2019/2088) by six months, from January 01, 2022 to July 01, 2022.
EIOPA Consults on Reporting and Disclosures Under Solvency II
The European Insurance and Occupational Pensions Authority (EIOPA) proposed to amend the supervisory statement on supervision of run-off undertakings that are subject to Solvency II regulation.
BoE Consults on Approach to Setting MREL, Publishes Bail-In Guidance
The Bank of England (BoE) published a consultation paper on approach to setting minimum requirement for own funds and eligible liabilities (MREL), an operational guide on executing bail-in, and a statement from the Deputy Governor Dave Ramsden.
EBA Seeks Views on Proportionality Assessment Methodology
The European Banking Authority (EBA) is seeking preliminary input on standardization of the proportionality assessment methodology for credit institutions and investment firms.
US Agencies Propose Changes to Call Reports and Instructions
Certain regulatory authorities in the US are extending period for completion of the review of certain residential mortgage provisions and for publication of notice disclosing the determination of this review until December 20, 2021.
PRA Finalizes Rulebook Definition of Higher Paid Material Risk-Taker
The Prudential Regulation Authority (PRA) published the policy statement PS18/21, which introduces an amendment in the definition of "higher paid material risk taker" in the Remuneration Part of the PRA Rulebook.
