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CFTC DCR: Variation Margin Payments Are Settlement of Cleared Swap Exposures, Not Collateral

Earlier today, the CFTC’s Division of Clearing and Risk issued an interpretation stating that, “variation margin (‘VM’) payments and all other payments in satisfaction of outstanding exposures on counterparty’s cleared swap positions constitute settlement of the outstanding exposure and not collateral against it.”  The practical effect of this interpretation… Continue Reading

Tri-Party Repo Data: March 2017

The Federal Reserve Bank of New York (FRBNY) released their monthly statistics of the U.S. tri-party repo market for March 2017. Beginning with the March 2017 data, the FRBNY will no longer publish the PDF and excel files containing single month statistics to which we ordinarily provide a hyperlink. Instead, tri-party repo statistics will only … Continue Reading

Cryptocurrency Platform Provider Seeks No-Action Relief from CFTC: Two Observations

On October 18th, a cryptocurrency platform provider (Poloniex, Inc.) issued a press release announcing that it filed a request for no-action relief with the Commodity Futures Trading Commission (the “CFTC”) seeking request with respect to the CFTC’s laws as they relate to margin and lending transactions.  To our knowledge, this is first time that a … Continue Reading

Making Sense of the CFTC’s Enforcement Order and Settlement with Bitfinex

On June 2nd, the U.S. Commodity Futures Trading Commission (the “CFTC”) announced an enforcement order and settlement with BFXNA Inc. d/b/a Bitfinex, an online platform for exchanging and trading cryptocurrencies (the “Platform”).  This posting will summarize that order with the goal of helping our readers make sense of the current state of the law with respect to … Continue Reading

SEC Enforcement Action: Illegal Offering of Security-Based Swaps

On June 17th, the Securities and Exchange Commission (“SEC”) announced an enforcement action against a company for illegally offering “complex derivatives products to retail investors”.  According to the related SEC enforcement order, the respondents operated a website that allowed its users to buy or sell contracts that were valued by reference (or “linked”) to the … Continue Reading

CFTC Chairman Massad Outlines Proposal for Margin on Uncleared Swaps in Cross-Border Scenarios

By Andrew P. Cross and Shawn R. Durrani In a speech before the FIA International Derivatives Conference earlier this week, CFTC Chairman Timothy G. Massad outlined a proposal for dealing with the issue of margin on uncleared swaps in situations where one of the counterparties (or perhaps one or both of their guarantors or parent companies) are … Continue Reading

The “Repeal” of the Swaps Push-Out Rule: A Q&A For The Buy-Side

Section 716 of the Dodd-Frank Act (“DFA”), commonly called the “Swaps Push-Out Rule,” has been a point of contention from the time of its enactment in 2010.  Last month, this provision garnered another round of attention (contention?) when it was amended and “repealed” or “substantially repealed,” depending upon one’s view of financial markets and the like.  … Continue Reading

Family Offices Exempt From Registration as Commodity Trading Advisors

Martin E. Lybecker, partner at Perkins Coie LLP, prepared an Update (available here) that discusses CFTC No-Action Letter 14-143 issued by the Division of Swap Dealer and Intermediary Oversight of the Commodity Futures Trading Commission.  As more fully explained by Mr. Lybecker, that letter offers family offices relief from commodity trading advisor registration, in connection … Continue Reading

Issues and Trends of Interest to Buy-Side Derivatives End-Users: ISDA Publishes Survey

ISDA recently published the results of a survey that it conducted to identify key issues and trends for the buy-side, derivatives end-user community.  The results are fascinating and, we blelieve, accurately reflect the experiences of many market participants and professionals that are involved in the over-the-counter (OTC) derivatives markets.  The following is a brief summary of … Continue Reading

Canadian Trade Reporting to Commence October 31st – ISDA Amend Available for Canadian Representation Letter

OTC derivative trade reporting will commence on October 31st under regulations adopted in Quebec, Ontario, and Manitoba.  Among others, market participants that will be affected by this trade reporting deadline include U.S. persons that trade with certain Candian banks. ISDA has developed what is referred to as a “Canadian Representation Letter,” in order to facilitate adherence to the … Continue Reading

CFTC Committee to Consider Clearing of Non-Deliverable Forwards and Jurisdiction Over Bitcoin Derivatives at October 9th Meeting

The Global Markets Advisory Committee of the CFTC just annouced that it will consider two issues at an upcoming meeting: 1) Whether a clearing mandate is appropriate for NDFs, with a particular focus on how such a mandate would impact foreign exchange contracts; and 2) The CFTC’s jurisdiction with respect to derivatives contracts that reference … Continue Reading

Swap Execution Facility to Trade Bitcoin Swaps

TeraExchange, LLC (TeraExchange), a swap execution facility (“SEF”) registered with the Commodity Futures Trading Commission (“CFTC”), has announced it will begin trading a non-deliverable forward based upon the U.S. Dollar price of bitcoin (“Bitcoin Swap”). TeraExchange filed a self-certification application for the Bitcoin Swap with the CFTC on September 11, 2014 and issued a press … Continue Reading

ISDA Extends Adherence Deadline for 2014 Credit Derivatives Definition Protocol

Market participants have until 4 p.m. Eastern on Wednesday, September 17th at 12 noon Eastern.  The additional time was being given, according to ISDA, in order to give market participants more time to consider the addition of Caesar’s to the list of excluded refernce entities.  The press release is available here. Good day.  Good luck. DR2… Continue Reading

Attention Hedge Fund Managers Relying on Rule 4.7 or Rule 4.13(a)(3): CFTC Issues “JOBS Act Harmonization” – Notice Filing Required, Not Self-Executing

On September 9th, the Division of Swap Dealer and Intermediary Oversight (the “Division”) issued CFTC Letter No. 14-116, which provides exemptive relief to hedge fund operators that rely on exemptions for commodity pool operators (CPO(s)) from certain compliance or registration obligations under CFTC Rule 4.7 or CFTC Rule 4.13(a)(3), respectively.  As more fully described in this posting, the fund’s operator will need … Continue Reading
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