This post is Part 2 of a series of posts that addresses the impact of recent regulatory developments on the use of limited recourse provisions in futures customer agreements entered into between a futures commission merchant (an “FCM”) and an investment manager on behalf of one or more of the manager’s clients. In this post, … Continue Reading
Historically, many investment managers have negotiated limited recourse provisions into derivatives trading agreements entered into by the managers on behalf of their clients with banks, broker-dealers, and futures commission merchants (FCMs). In short, these provisions state that only the assets in the specified account under the control of that particular manager can be used to … Continue Reading
On December 21, 2018, the U.S. Securities and Exchange Commission (“SEC”) announced enforcement actions against two robo-advisers, Wealthfront Advisors LLC (“Wealthfront”) and Hedgeable Inc. (“Hedgeable”), for making false statements about investment products and publishing misleading advertising. “Robo-advisers” are investment advisers that provide automated, software-based portfolio management services. In a press release related to these actions, the Chief of the … Continue Reading
On October 31st, the CFTC’s Office of the Chief Economist (the “OCE”) issued a report about “Phase 5” of the uncleared margin rules (“UMR”) that are slated to go into effect on September 1, 2020. The purpose of the report was “to guide regulators in their responses to industry requests for relief” from the scheduled … Continue Reading
This post builds upon an idea presented in Part 4 of current series of posts on considerations for investment funds and advisers related to cryptocurrency derivatives. In particular, this post provides additional perspectives on the relationship of leverage, margin, and financing to two commodity interests: “retail commodity transactions” and a “swaps”. We decided to present … Continue Reading
This post is the fourth in a series that outlines key considerations for investment funds and their advisers regarding the application of the U.S. commodity laws to cryptocurrency derivatives. This post is intended to be a primer on the topic and is not legal advice. You should consult with your counsel regarding the application of … Continue Reading
This post is the third in a series that outlines key considerations for investment funds and their advisers regarding the application of the U.S. commodity laws to cryptocurrency derivatives. This post is intended to be a primer on the topic and is not legal advice. You should consult with your counsel regarding the application of … Continue Reading
This post is the second in a series that outlines key considerations for investment funds and their advisers regarding the application of the U.S. commodity laws to cryptocurrency derivatives. This posting is intended to be a primer on the topic and is not legal advice. You should consult with your counsel regarding the application of … Continue Reading
On December 15, 2017, the U.S. Commodity Futures Trading Commission (the “CFTC”) issued a proposed interpretation of the term “actual delivery” as used in the provision of the Commodity Exchange Act (the “CEA”) that grants the CFTC explicit authority to oversee the marketplace for “retail commodity transactions”. This is the first blog posting in a multi-part series that will … Continue Reading
In a speech yesterday for the Mercatus Center at George Mason University and the Institute for Financial Markets, CFTC Commissioner Brian Quintenz advocated for:… Continue Reading
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
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
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
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
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
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
On May 20th, the Securities and Exchange Commission (the “SEC”) proposed amendments to Form ADV, Part 1A and the related instructions and glossary (collectively, “Form ADV”). Jesse Kanach and Shawn Durrani of Perkins Coie’s Washington D.C. office have prepared the attached documents, which show what Form ADV would look like, if the SEC adopted all of these … Continue Reading
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
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
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
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
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
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
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
