CFTC Proposes Amendments to Trade Execution Requirement Under CEA
CFTC proposed amendments to regulations related to the trade execution requirement under the Commodity Exchange Act (CEA) and amendments to the existing regulations on swap execution facilities (SEFs) and designated contract markets (DCMs). Comments must be received by February 13, 2019. Additionally, CFTC is requesting public comment, until January 29, 2019, on the practice of “post-trade name give-up” on SEF markets, where trades are anonymously executed and intended to be cleared.
Proposed Amendments to Regulations on Trade Execution Requirement—Among other amendments, the proposed amendments cover the following:
- Applying the SEF registration requirement to certain swap-broking entities and aggregators of single-dealer platforms
- Broaden the scope of the trade execution requirement to include all swaps subject to the clearing requirement under the CEA that a SEF or a DCM lists for trading
- Allow SEFs to offer flexible execution methods for all swaps that they list for trading
- Amend straight-through processing requirements
- Amend the block trade definition
The proposed rules, which also include non-substantive amendments and various conforming changes to other CFTC regulations, reflect CFTC's enhanced knowledge and experience with swap trading characteristics and would further the Dodd-Frank Act's statutory goals for SEFs, that is, promote more SEF trading and pre-trade price transparency in the swaps market. Further, the proposed rules are intended to strengthen the existing swaps regulatory framework by reducing unnecessary complexity, costs, and other burdens that impede SEF development, innovation, and growth.
Proposal on Practice of Post-Trade Name Give-up—Post-trade name give-up is a long-standing market practice in many swaps markets and originated as a necessary practice in OTC (over-the-counter) markets for uncleared swaps. Post-trade name give-up refers to the practice of disclosing the identity of each swap counterparty to the other after a trade has been matched anonymously. In the case of uncleared swaps, post-trade name give-up enables a market participant to perform a credit-check on its counterparty prior to finalizing a trade. For trades that are cleared, however, the rationale for post-trade name give-up is less clear cut. As the swaps market increasingly becomes a cleared market, CFTC believes that it is reasonable to ask whether the post-trade name give-up practice continues to serve a valid industry purpose in facilitating swaps trading. In particular, CFTC requests comment on the following questions:
- What utility or benefits (for example: commercial, operational, legal, or other) does post-trade name give-up provide in SEF markets where trades are anonymously executed and cleared? Is post-trade name give-up a necessary or appropriate means to achieve such benefits?
- Does post-trade name give-up result in any restraint of trade or impose any anti-competitive burden on swaps trading or clearing?
- Should CFTC intervene to prohibit or otherwise set limitations with respect to post-trade name give-up? If so, what regulatory limitations should be set and how should they be set in a manner that is consistent with the CEA?
- Should post-trade name give-up be subject to customer choice or SEF choice, given the flexible execution methods in CFTC recent SEF notice of proposed rulemaking?
Related Links
Comment Due Date: February 13, 2019 (Trade Execution Requirement) and January 29, 2019 (Post-trade Name Give-up)
Keywords: Americas, US, Banking, Securities, Trade Execution Requirement, Commodity Exchange Act, Post-trade Name Give-up, Swap Execution Facility, Designated Contract Markets, CFTC
Related Insights
|
News
OFR Adopts Data Collection Rule on Centrally Cleared Repo TransactionsOFR adopted a final rule to establish a data collection covering centrally cleared funding transactions in the U.S. repurchase agreement (repo) market.
February 20, 2019
WebPage
Regulatory News
|
|
News
FHFA Finalizes Rule on Federal Home Loan Bank Capital RequirementsFHFA published, in Federal Register, the final rule to adopt, as its own, portions of the regulations of the Federal Housing Finance Board pertaining to the capital requirements for the Federal Home Loan Banks.
February 20, 2019
WebPage
Regulatory News
|
|
News
SRB Publishes Framework for Performing Valuations in ResolutionThe framework provides independent valuers and the general public with an indication of the expectations of SRB on the principles and methodologies for valuation reports, as set out in the legal framework.
February 19, 2019
WebPage
Regulatory News
|
|
News
US Agencies Extend Consultation Period for the Proposed SA-CCRUS Agencies (FDIC, FED, and OCC) extended the comment period for a proposed rule to update their standards for how firms measure counterparty credit risk posed by derivative contracts.
February 18, 2019
WebPage
Regulatory News
|
|
News
FED Extends Consultation Period for Stress Testing RuleFED has published in the Federal Register a notice proposing amendments to the company run and supervisory stress test rules.
February 15, 2019
WebPage
Regulatory News
|
|
News
EBA Single Rulebook Q&A: Third Update for February 2019EBA published answers to two questions under the Single Rulebook question and answer (Q&A) updates for this week.
February 15, 2019
WebPage
Regulatory News
|
|
News
SEC Proposes Rule on Risk Mitigation Techniques for Uncleared SBSSEC proposed a rule that would require the application of specific risk-mitigation techniques to portfolios of security-based swaps (SBS) that are not submitted for clearing.
February 15, 2019
WebPage
Regulatory News
|
|
News
FSB Report Examines Financial Stability Implications of FintechFSB published a report that assesses fintech-related market developments and their potential implications for financial stability.
February 14, 2019
WebPage
Regulatory News
|
|
News
US Agencies Amend Regulatory Capital Rule to Allow Phase-In for CECLUS Agencies (FDIC, FED, and OCC) adopted the final rule to address changes to credit loss accounting under the U.S. generally accepted accounting principles; this includes banking organizations’ implementation of the current expected credit losses (CECL) methodology.
February 14, 2019
WebPage
Regulatory News
|
|
News
FASB Proposes Taxonomy Improvements for the Credit Losses StandardFASB proposed the taxonomy improvements for the proposed Accounting Standards Updates on Targeted Transition Relief for Topic 326 (Financial Instruments—Credit Losses) and Topic 805 (on Business Combinations—Revenue from Contracts with Customers).
February 14, 2019
WebPage
Regulatory News
|
