On October 2, 2023, the Commodity Futures Trading Commission (CFTC) published a notice of proposed rulemaking (NPRM), which includes a proposal to amend portions of 17 C.F.R. § 4.7. Under Regulation 4.7, commodity pool operators (CPOs) and commodity trading advisors (CTAs) are exempt from certain disclosure, reporting, and recordkeeping requirements, so long as the “prospective and actual pool participants and/or advisory services are restricted to individuals and entities considered ‘Qualified Eligible Persons’” (QEPs).

Continue Reading CFTC Proposes Amendments to Regulation 4.7 Exemption

The United States Department of Treasury’s Office of Financial Research (OFR) conducted a pilot survey to determine why primary dealers prefer trading in the noncentrally cleared bilateral repurchase agreement (NCCBR) market segment of the United States repurchase agreement (repo) market. Primary dealers serve as the trading counterparties for the Federal Reserve’s open market operations. The OFR Brief suggests primary dealers prefer to trade in NCCBR over other repo market segments because it provides them with much greater flexibility.

Continue Reading Netted Packages Drive Large Trading Volumes in Noncentrally-Cleared, Bilateral Repos

On June 5, 2023, the Commodity Futures Trading Commission (CFTC) issued an order authorizing CBOE Clear Digital, LLC (“CBOE Clear”), a registered derivatives clearing organization (DCO), to clear margined digital asset futures contracts.  Concurrent with the June 5th order, CFTC Commissioner Christy Goldsmith Romero issued a supporting statement in respect of the order. This blog post provides an overview of the terms and conditions of the CFTC’s June 5th order, particularly in light of certain of Commissioner Goldsmith Romero’s comments, following a brief outline of the administrative history related to CBOE Clear’s digital asset product line-up.

Continue Reading CFTC Permits CBOE Clear Digital, LLC to Clear Digital Asset Futures on a Margined Basis

A recent settlement order serves as a reminder of how investment strategies using derivatives can produce unanticipated results. In this case, the results led to undisclosed returns of capital and a $6.5 million civil penalty. The case illustrates the importance of instituting regular communications among portfolio managers, risk and compliance officers, attorneys and accountants, so that the results of an investment strategy are fully anticipated.

Continue Reading The Dangers of Derivatives

In response to recent client questions regarding the various considerations and options for holding short-term funds, we have prepared a reference chart comparing certain key characteristics of demand deposits with government securities, money market funds, and other short-term cash management instruments. Please note that this information is not provided as investment advice. 

Please contact your Perkins Coie lawyer or email PCBankingTaskForce@perkinscoie.com with questions or for assistance.

View the reference guide.

On February 28, 2023, the National Futures Association (NFA) submitted the proposed adoption of NFA Compliance Rule 2-51 to the Commodity Futures Trading Commission (CFTC). The new compliance rule will apply to NFA members, including commodity pool operators (CPOs) and commodity trading advisors (CTAs), engaged in activities involving digital asset commodities. For purposes of the new compliance rule, the term digital asset commodity means Bitcoin and ether.

Upon adoption, the new compliance rule will:

1) Impose anti-fraud, just and equitable principles of trade, and supervision requirements on NFA Members and Associates that engage in digital asset commodity activities, including spot or cash market activities; and

2) Require NFA Members, including CPOs and CTAs, to make disclosures required by NFA’s Interpretive Notice 9073, Disclosure Requirements for NFA Members Engaged in Virtual Currency Activities.

In the Explanation of the Proposed Rule, NFA indicated that the proposed compliance rule was intended to fill an existing gap in the oversight of digital asset markets by NFA. Specifically, NFA explained that:

Well over 100 NFA Member firms have reported to NFA that they engage in business activities related to digital assets, both in commodity interest and spot markets. However, with the exception of NFA’s Interpretive Notice 9073, which sets forth limited disclosure requirements, NFA does not have any rules that specifically address its Members’ digital asset activities in the spot markets.

Explanation of Proposed Rule, P. 3 of NFA Submission to CFTC Dated February 28, 2023

In its submission, NFA indicated that it plans to make this compliance rule effective as early as ten days after receipt of the submission by the CFTC unless the CFTC notifies NFA that the CFTC has determined to review the proposal for approval.

Good day. Good to know? DR2

According to Newsweek, Punxsutawney Phil saw his shadow on February 2, 2023, signaling 6 more weeks of winter. And, on February 24, 2023, the Financial Institution Regulatory Authority (FINRA) submitted a filing to the SEC that, in effect, will defer implementation of revisions to FINRA Rule 4210 mandating so-called “TBA margining” (technically, margin requirements in respect of Covered Agency Transactions) by another 6 month period .

The “new” effective date for the implementation of revisions to FINRA Rule 4210 that mandate the margining of Covered Agency Transaction is (as of now) October 25, 2023.


Hardly – in fact the two events are not related at all….To quote that wise video game character Mario (of Super Mario Bros. fame), “Here we go again.”

Good day. Good delay (again)? DR2

While working out the possible impact of the SEC’s proposal to require central clearing of triparty repurchase agreements, we realized that we short-changed the analysis of multilateral netting in our last post. Our explanation of the SEC’s example focused on just the cash side of the trades, which is to say the amounts to be paid. To appreciate multilateral netting fully, we need to consider the security side of the trades, what is to be delivered, as well. This post seeks to rectify our oversight.

Continue Reading Treasury Clearing Proposal:  More on Multilateral Netting

Our previous post explained the SEC’s proposal (the Proposal) to require central clearing of all “eligible secondary market transactions” with a participant in the Fixed Income Clearing Corporation (FICC). In this post we review the benefits of central clearing cited by the SEC to justify its Proposal. We also discuss “hybrid clearing” and “multilateral netting.” Continue Reading Central Clearing of Treasury Trades—What the SEC Hopes to Accomplish