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On April 6, 2020, the Commodity Futures Trading Commission (“CFTC”) Office of Customer Education and Outreach (“OCEO”) published an additional customer advisory (“Advisory”) cautioning the public regarding potential fee scams. OCEO noted that many of these schemes are now targeting individuals that may be financially impacted by the Coronavirus pandemic. OCEO previously published a Customer Advisory on March 31, 2020 regarding potential fraudulent schemes posing to take advantage of market volatility related to the pandemic. (See our blog post on this advisory here).
Continue Reading CFTC Publishes New Customer Advisory Cautioning Away From Potential Coronavirus-Related Fee Scams

Three federal bank regulatory agencies – the FRB, FDIC, and OCC – today announced two COVID-19 related actions to support the U.S. economy and allow banking organizations to continue to lending to households and businesses:

  • Allow early adoption of the “standardized approach for measuring counterparty credit risk,” or “SA-CCR,” which is a new way for banking organizations to measure counterparty credit risk, in pertinent part, from derivatives; and
  • Provide certain banks with an additional two years to transition to the new “current expected credit loss,” or “CECL,” an accounting standard that is used for purposes of determining how much regulatory capital a bank has to set aside.

This blog post provides additional information about these announcements.Continue Reading Bank Regulators Announce Actions to Support Economy

The Federal Deposit Insurance Corporation (FDIC) today issued an “FAQ” to financial institutions entitled, Frequently Asked Questions for Financial Institutions Affected by the Coronavirus Disease 2019 (Referred to as COVID-19).

The FDIC has highlighted the following items in respect of this FAQ:

  • The FDIC encourages financial institutions to work with customers affected by COVID-19 in a prudent manner, especially borrowers from industry sectors particularly vulnerable to the volatility in the current economic environment and small businesses and independent contractors that are reliant on affected industries.
  • A financial institution’s prudent efforts to modify the terms on existing loans for affected customers will not be subject to examiner criticism.

Continue Reading Payment Accommodations Under Commercial Loans by Banks to Borrowers: Remember the Related Interest Rate Hedge Documentation

The U.S. Commodity Futures Trading Commission (CFTC) yesterday announced that its Division of Market Oversight (DMO) has granted temporary no-action relief to designated contract markets (DCMs) and swap execution facilities (SEFs).

In a related press release, CFTC Chairman Heath P. Tarbert stated that, “These prudent, targeted, and temporary actions will help facilitate orderly trading and liquidity in our derivatives markets. The CFTC remains squarely focused on promoting their integrity, resilience, and vibrancy through sound regulation.”

This post summarizes this no-action relief.

In addition, we have prepared the attached Overview of COVID-19 Relief Provided by the CFTC to SEFs and DCMs to supplement the information presented in this post.Continue Reading CFTC Provides COVID-19 No-Action Relief to DCMs and SEFs

On March 18, 2020, the U.S. Commodity Futures Trading Commission (“CFTC”) Office of Customer Education and Outreach (“OCEO”) published a Customer Advisory warning market participants away from potential fraudulent schemes that may arise to take advantage of market volatility related to COVID-19.

In a related Press Release, CFTC Chief Communications Officer and Director of Public Affairs Michael Short stated, “[d]uring this period of market volatility, we want to ensure the public has important information to help detect and stop fraud”.Continue Reading CFTC Staff Publish Customer Advisory on Fraudulent Schemes in Wake of Coronavirus Pandemic

The U.S. Commodity Futures Trading Commission (CFTC) today announced that its Division of Swap Dealer and Intermediary Oversight (DSIO) has granted temporary no-action relief to futures commission merchants (FCMs), introducing brokers (IBs), swap dealers (SDs), retail foreign exchange dealers (RFEDs), floor brokers (FBs), and members of designated contract markets (DCMs) and swap execution facilities (SEFs) that are not registered with the CFTC in any capacity.

In a related press release, CFTC Chairman Heath P. Tarbert stated that, “These prudent, targeted, and temporary actions will help facilitate orderly trading and liquidity in our derivatives markets.  The CFTC remains squarely focused on promoting their integrity, resilience, and vibrancy through sound regulation.”

This post summarizes this no-action relief.

In addition, we have prepared the attached Overview of COVID-19 Relief Provided by the CFTC to supplement the information presented in this post.Continue Reading CFTC Provides COVID-19 No-Action Relief to FCMs, IBs, SDs, RFEDs, FBs, and Members of DCMs and SEFs

This post is the second in a series that we are preparing in response to questions from clients, colleagues, and contacts.  Yesterday’s post, which addressed interest rate swaps in a zero or negative interest rate environment, is available here.

In today’s post, we address considerations related to Decline in Net Asset Value (NAV) provisions in agreements that govern the trading of over-the-counter (OTC) derivatives and other financial contracts. 

As we explore in greater detail, the recent volatility across financial markets makes it more important than ever for investment managers and their clients to understand – and focus on – these fairly common contractual provisions.Continue Reading Master Agreements and Volatile Markets: Decline in Net Asset Value Provisions