CFTC amends chief compliance officer duties and annual report requirements

2019 ◽  
Vol 20 (1) ◽  
pp. 10-16
Author(s):  
Julian E. Hammar
Keyword(s):  
Annual Report ◽  
Securities And Exchange Commission ◽  
Futures Trading ◽  
Content Type ◽  
The Public ◽  
Close Analysis ◽  
Compliance Officers ◽  
Final Rule ◽  
Commodity Futures Trading Commission ◽  
Compliance Officer

Purpose This paper summarizes the requirements of rule amendments promulgated by the Commodity Futures Trading Commission (CFTC) in 2018 regarding the duties of Chief Compliance Officers (CCOs) of swap dealers, major swap participants, and futures commission merchants (collectively, Registrants) and the requirements for preparing, certifying and furnishing to the CFTC the CCO’s annual report. Design/methodology/approach This paper provides a close analysis of the CFTC’s final rule amendments that make clarifications regarding the CCO’s duties and seek to harmonize with similar rules of the Securities and Exchange Commission (SEC) applicable to security-based swap dealers.It also analyzes rule amendments for the CCO’s report that provide clarifications and simplify certain requirements.In each case, it discusses comments from the public and the CFTC’s responses to those comments. Findings This paper finds that the rule amendments provide a number of helpful clarifications and simplify certain existing requirements for Registrants and their CCOs subject to the rules.While the rules overall achieve greater harmonization with similar rules of the SEC governing CCOs of security-based swap dealers, this paper notes that care will need to be taken by CFTC Registrants who also become registered with the SEC to be cognizant of remaining differences between the CFTC’s and SEC’s rules in order to ensure compliance with the rules of each agency. Originality/value This paper provides valuable information regarding the duties of CCOs of Registrants and CCO annual report requirements from an experienced lawyer focused on commodities, futures, derivatives, energy, corporate, and securities regulatory matters.

Cryptocurrency regulations will become more variable

2018 ◽  
Keyword(s):  
Securities And Exchange Commission ◽  
Futures Trading ◽  
Content Type ◽  
Securities Law ◽  
The Us ◽  
Commodity Futures Trading Commission ◽  
Regulatory Scrutiny ◽  
Market Capitalisation ◽  
And Control

Subject Cryptocurrency classification. Significance The classification of crypto assets under US securities law is less clear than in Japan, China and South Korea, but a working group comprising senior officials of the US Securities and Exchange Commission (SEC) and the US Commodity Futures Trading Commission (CFTC) is discussing it. The unclear status of Ethereum’s ether and Ripple’s XRP, the second- and third-largest crypto assets by market capitalisation, is the centre of attention. Impacts Mined crypto assets including bitcoin and litecoin are likely to remain classed as commodities. Ether and XRP are unlikely to be designated as commodities as they were initial coin offerings (ICOs) but also not as standard securities. As ICOs come under increasing regulatory scrutiny and control, more will fail, but a few may achieve notable success.

CFTC adopts amendments to position limit aggregation rules

2017 ◽  
Vol 18 (2) ◽  
pp. 31-35
Author(s):  
J.P. Bruynes ◽  
Jason Daniel ◽  
Libbie Walker
Keyword(s):  
Design Methodology ◽  
Final Position ◽  
Limited Time ◽  
Futures Trading ◽  
Content Type ◽  
Final Rule ◽  
Commodity Futures Trading Commission ◽  
Practical Guidance ◽  
Trading Program ◽  
Independent Account

Purpose To explain the final position limit aggregation rules and exemptions pertaining to derivative positions in nine agricultural commodities adopted by the Commodity Futures Trading Commission on December 5, 2016 and effective February 14, 2017, the notice filing deadline with respect to which was extended by the CFTC by limited time no-action relief until August 14, 2017. Design/methodology/approach Explains the position limit aggregation rules and exemptions pertaining to equity interests in owned entities, ownership or equity interests in pooled accounts or positions, positions of an “eligible entity” in connection with client positions carried by an “independent account controller,” positions held by futures commission merchants (FCMs) in discretionary accounts or customer trading program accounts, equity interests of underwriters based on unsold allotments of securities in distributions, broker-dealers if the equity interest is acquired in the normal course of business and positions for which information cannot be collected without risk of violating a law. Findings Unless an exemption from aggregation is available, all positions in accounts for which any person controls the trading or holds a 10 per cent or greater ownership or equity interest must be aggregated with positions held, and trading done, by such person. The final rule adds several new exemptions, including for persons with a 10 per cent or greater ownership or equity interest in an entity so long as certain conditions establishing independence are met. The final rule requires notice filing to take advantage of most exemptions from aggregation. Originality/value Practical guidance from experienced lawyers specializing in securities, funds, and investment management.

The SEC’s final rule regarding price quotes and research reports relating to security-based swaps

2018 ◽  
Vol 19 (3) ◽  
pp. 9-12
Author(s):  
James Schwartz
Keyword(s):  
Design Methodology ◽  
Securities And Exchange Commission ◽  
Securities Regulation ◽  
Regulatory Regime ◽  
Content Type ◽  
Close Analysis ◽  
Final Rule ◽  
Price Quotes

Purpose This paper aims to summarize the requirements of a new US Securities and Exchange Commission (SEC) rule regarding certain communications relating to security-based swaps in the context of the SEC’s ongoing efforts to establish its regulatory regime for such swaps. Design/methodology/approach This paper provides a close analysis of an SEC final rule that provides that certain communications relating to security-based swaps will not constitute “offers” for purposes of Section 5 of the Securities Act of 1933, under which generally offers or sales of a security must be registered or made pursuant to an exemption from registration. The paper also analyzes the prospects for a general exemption from registration requirements for security-based swaps involving eligible contract participants, and it places the final rule in the context of the SEC’s broader efforts to establish its final rules for security-based swaps. Findings In addition to detailing the requirements of the final rule, this paper concludes that it is unlikely that the SEC will decide, generally, to exempt many security-based swaps from registration requirements, and that it is likely that a significant amount of time will elapse before the SEC finalizes most of its remaining rules for security-based swaps. Originality/value This paper contains valuable information regarding the regulation of security-based swaps in the context of securities regulation and the SEC’s other rules for such swaps.

CFTC harmonization rules: CPOs of RICs benefit from “substituted compliance”

2014 ◽  
Vol 15 (1) ◽  
pp. 17-24
Author(s):  
Daphne G. Frydman ◽  
Raymond A. Ramirez
Keyword(s):  
Securities And Exchange Commission ◽  
Futures Trading ◽  
Content Type ◽  
Investment Companies ◽  
Commodity Futures Trading Commission ◽  
Foreign Corporations ◽  
Investment Advisers ◽  
Sec Regulation ◽  
Asset Managers ◽  
Practical Implications

Purpose – To explain regulatory developments and changes to compliance obligations for asset managers registered with the Commodity Futures Trading Commission (CFTC) as commodity pool operators of registered investment companies. Design/methodology/approach – Provides a general overview of new CFTC rules (Harmonization Rules) that afford relief to commodity pool operators of commodity pools that are registered as investment companies under the Investment Company Act of 1940; describes the specific CFTC disclosure, reporting and recordkeeping requirements that remain applicable to commodity pool operators that are also subject to Securities and Exchange Commission (SEC) regulation by virtue of operating commodity pools that are registered investment companies; discusses reliance on substituted compliance with applicable SEC requirements; outlines the method for claiming relief under the Harmonization Rules; provides guidance for CPOs of RICs that use controlled foreign corporations (CFCs). Findings – CPOs of RICs benefit from “substituted compliance” under the CFTC Harmonization Rules. Practical implications – Explains to investment advisers that have registered as CPOs of RICs the disclosure, reporting and recordkeeping obligations that apply to them, how to take advantage of compliance with SEC requirements in lieu of CFTC requirements, and how to claim relief with respect to certain CFTC compliance obligations. Originality/value – Practical explanation by experienced derivatives and securities lawyers.

Whistling fast and furious: SEC and CFTC continue to issue awards

2016 ◽  
Vol 17 (3) ◽  
pp. 28-30
Author(s):  
Mark Srere ◽  
Jennifer Mammen
Keyword(s):  
Design Methodology ◽  
Securities And Exchange Commission ◽  
Lessons Learned ◽  
Publicly Traded ◽  
Futures Trading ◽  
Content Type ◽  
Publicly Traded Companies ◽  
Compliance Programs ◽  
Commodity Futures Trading Commission ◽  
Practical Implications

Purpose To analyze the recent Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) whistleblower awards and to evaluate what issues may be important for in-house counsel in the future. Design/methodology/approach The article discusses the most recent whistleblower settlements and focuses on lessons learned for compliance. Findings The SEC continues to publicize substantial whistleblower awards in an effort to attract additional whistleblowers and gather information that may lead to successful enforcement actions. In addition, the CFTC, whose corresponding Whistleblower Program has been slow to issue awards has announced that it is ramping up its program. Practical implications Companies should ensure that they have vigorous compliance programs in place to prevent and detect potential securities violations and to respond immediately in order to mitigate penalties that may result from inadvertent violations. Originality/value This article identifies recent awards issued under Whistleblower Programs created under the Dodd-Frank Act and should be of interest to publicly traded companies and all entities regulated by the SEC and CFTC that may be targeted by potential whistleblowers.

Differentiating Centralization and Overlap in Swap Regulation

2019 ◽  
pp. 127-148
Author(s):  
Alejandro E. Camacho ◽  
Robert L. Glicksman
Keyword(s):  
Securities And Exchange Commission ◽  
Commodity Futures ◽  
Title Vii ◽  
Regulatory Regime ◽  
Securities Markets ◽  
Futures Trading ◽  
Commodity Futures Trading Commission ◽  
Legislative Changes ◽  
Over Time

This chapter explains how legislative changes to, and the broader commentary on, US derivatives regulation illustrate the value of parsing the overlap/distinct and centralization/decentralization dimensions in assessing the tradeoffs of regulatory allocations. The Securities and Exchange Commission and the Commodity Futures Trading Commission have been tasked with decentralized authority over securities and futures, respectively. Over time, their jurisdictions have increasingly overlapped as the futures and securities markets converged. Reorganization proposals and legislation to correct perceived problems with the overlapping, decentralized regulatory regime (such as Title VII of the Dodd-Frank Act) have usually failed to parse the various tradeoffs between overlap and distinct or between centralized and decentralized authority. By limiting their analysis, policymakers and observers of derivatives regulation may have misdiagnosed problems with the existing allocation or missed potential opportunities to craft different regulatory configurations that might have better accommodated policy tradeoffs or been more politically viable.

Securities Regulation

2019 ◽  
pp. 287-324
Author(s):  
Alan N. Rechtschaffen
Keyword(s):  
Hedge Funds ◽  
Financial Regulation ◽  
Regulatory Reform ◽  
Securities And Exchange Commission ◽  
Securities Regulation ◽  
Futures Trading ◽  
Product Lines ◽  
Wall Street ◽  
Consumer Protection Act ◽  
Commodity Futures Trading Commission

Prior to the 2007 financial crisis, financial regulation was compartmentalized along lines of segmented financial instruments. With the exception of the regulation of swaps as described in chapter 14, post-crisis regulatory reform maintains this bifurcation of regulation along product lines between the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC). The SEC and the CFTC have begun to issue rules establishing a coordinated approach to regulating certain derivatives under the Wall Street Reform and Consumer Protection Act (widely known as the Dodd-Frank Act) in particular as they relate to swaps. This chapter discusses the jurisdiction of the SEC, what constitutes a security, sellers’ representations, consequences of securities, hedge funds, and derivatives regulation.

Recent key Bitcoin and virtual currency regulatory and law enforcement developments

2015 ◽  
Vol 16 (1) ◽  
pp. 13-18 ◽  
Author(s):  
Evan L. Greebel ◽  
Kathleen Moriarty ◽  
Claudia Callaway ◽  
Gregory Xethalis
Keyword(s):  
New York ◽  
Law Enforcement ◽  
Financial Services ◽  
New York State ◽  
Securities And Exchange Commission ◽  
Regulatory Regime ◽  
York State Department ◽  
Virtual Currency ◽  
Content Type ◽  
Commodity Futures Trading Commission

Purpose – To explain and draw conclusions from six recent bitcoin and virtual currency regulatory and law enforcement developments. Design/methodology/approach – Discusses and draws conclusions from six recent, important developments: two administrative rulings from the Financial Crimes Enforcement Network (FinCEN), recent remarks by New York State Department of Financial Services Superintendent Benjamin Lawsky, remarks by Mark Wetjen of the Commodity Futures Trading Commission (CFTC), a recent Securities and Exchange Commission (SEC) informational sweep of crowdsales of crypto-equity, and the US Department of Justice proceedings against Trendon Shavers. Findings – Rather than trying to stifle or control virtual currencies, US governmental entities recognize the long-term value of virtual currencies and are trying to create a regulatory regime to foster growth and development, and an atmosphere where institutional and retail investors are protected. Originality/value – Provides an overview of the key United States regulatory issues facing companies engaged in Bitcoin-related businesses.

US rating agency reform to rest on enforcement

2016 ◽  
Keyword(s):  
Business Model ◽  
Global Economy ◽  
Annual Report ◽  
Credit Rating ◽  
Credit Ratings ◽  
Securities And Exchange Commission ◽  
Political Support ◽  
Political Debate ◽  
Content Type ◽  
Rating Agencies

Subject The latest annual report of the Securities and Exchange Commission (SEC) on credit ratings agencies (CRAs). Significance The latest annual report of the Securities and Exchange Commission (SEC) on credit rating agencies (CRAs) suggests that practices that contributed to the 2007-08 financial crisis persist, and that the prevailing CRA business model continues to incentivise high credit ratings rather than accurate ones. The underlying conflict of interest inherent in the prevailing CRA business model is well-recognised, but there is a lack of broad political support to address the problem. Impacts The report will increase pressure on the SEC to strengthen its CRA enforcement policy. The report is shaping the terms of political debate and providing fodder, especially for Democratic presidential candidate Bernie Sanders. Renewed financial market turbulence and strains in the global economy could provide fresh tests for CRAs.

scholarly journals Corporate governance and executive perquisites

2017 ◽  
Vol 16 (1) ◽  
pp. 21-45 ◽  
Author(s):  
Angela Andrews ◽  
Scott Linn ◽  
Han Yi
Keyword(s):  
Corporate Governance ◽  
Design Methodology ◽  
Ordinary Least Squares ◽  
Securities And Exchange Commission ◽  
Corporate Disclosure ◽  
Content Type ◽  
Listed Firms ◽  
The Public ◽  
Disclosure Requirements ◽  
Rule Change

Purpose The purpose of this paper is to examine the relation between executive perquisite consumption and indicators of corporate governance after the Securities and Exchange Commission (SEC) expanded the disclosure requirements related to perquisites. Design/methodology/approach This study uses ordinary least squares and Tobit regressions to examine the dollar value of perquisites consumed, the number of perquisites consumed and the types of perquisites consumed. Findings The analysis shows that firms with weak corporate governance are more likely to award perquisites to executives. Firms characterized as being more prone to the presence of agency problems are associated with greater levels of perquisite consumption. Finally, there is evidence that not all perquisite consumptions can be attributed to an agency problem. Efficiently operating firms are associated with greater levels of perquisite consumption as are larger firms. Research limitations/implications The authors examine firms in the period immediately after the SEC initiated the expanded disclosures. This may limit the generalizability of the results to other exchange-listed firms that changed their perquisite policy as a result of the rule change. Originality/value The paper extends the literature on corporate governance and mandatory corporate disclosure by investigating the association between corporate governance characteristics and perquisite consumption. This paper examines this relation immediately after the SEC expanded the disclosures surrounding perquisites to provide the public with more transparent disclosures.

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