FIA EVENTS » 3/10 - 3/13 Boca 2010 - 35th Annual International Futures Industry Conference » 3/18 2009 Derivatives Exchange Volume Webinar » 6/8 - 6/9 IDX - 3rd Annual FIA/FOA International Derivatives Expo DIVISION EVENTS » 4/13 Clearing 2010: A Derivatives Forum » 4/13 Trading IT » 4/15 FIA Japan Annual General Meeting and Reception » 4/28 - 4/30 32nd Annual Law & Compliance Division Conference on the Regulation of Futures, Derivatives and OTC Products View FI Calendar NEW! FIA Comments on SEC/CFTC Harmonization Report           In response to a Congressional request, the FIA has drafted a four-page letter summarizing its views on the regulatory harmonization report issued by the Commodity Futures Trading Commission and the Securities and Exchange Commission in October 2009. The letter was submitted to the Government Accountability Office, the investigative arm of Congress, on Feb. 12, 2010. The letter identified four areas of regulatory harmonization that the FIA views as “top priorities.” These four areas are: portfolio margining, product approvals, CFTC oversight of exchange rules, and insider trading. The FIA letter also identified several SEC/CFTC recommendations that it does not support and offered several suggestions for potential areas of harmonization that were not included in the report. Click Here for the PDF FIA Comments on Revised CME Petition to Commingle CDS Margin              On Feb. 4, 2010, the FIA filed a comment letter with the Commodity Futures Trading Commission regarding a revised petition from CME Group seeking permission to commingle customer funds used to margin cleared credit default swaps with customer funds used to margin exchange-traded futures and options. The letter noted that CME had made “fundamental changes” to the structure of its default fund in support of CDS clearing without giving all clearing members an opportunity to express their views on these changes. The letter urged the CFTC to ensure greater transparency in the process for approving such changes. The FIA also reiterated concerns expressed in an earlier comment letter about the potential risks if a clearing member were to default. In such a scenario, having cleared CDS in a customer segregated account could threaten the integrity of customer segregated accounts and could delay or even prevent the transfer of exchange-traded positions to a solvent FCM. The FIA therefore reiterated its recommendation that the CFTC defer action on the CME petition until the regulator had adopted “objective standards” for determining which cleared over-the-counter derivatives can be held in customer segregated accounts. Click Here for the PDF FIA Urges CFTC to Support “Comprehensive Review” of Bankruptcy Issues The Futures Industry Association submitted a comment letter to the Commodity Futures Trading Commission on Jan. 15, 2010 responding to a CFTC proposal that would authorize a bankruptcy trustee to operate a commodity brokerage business for a limited period of time. The FIA agreed that the proposed authorization would be appropriate when dealing with insolvent firms, as in the case of Lehman Brothers Inc. But the FIA said it could not support the proposal in its present form for three main reasons. First, the FIA urged the CFTC to address this issue in the context of a “comprehensive review” of the bankruptcy code and the CFTC’s rules in this area. Second, the FIA urged the CFTC to work with the Securities and Exchange Commission on “uniform procedures” to guide a trustee of an insolvent firm that is registered as both a broker-dealer and a futures commission merchant. Third, the FIA recommended that the proposal should provide more detailed guidance to a trustee and CFTC staff.   Click Here for the PDF CFTC Unveils Position Limit Proposal Jan. 14, 2010   The Commodity Futures Trading Commission today is holding a public meeting to discuss whether to release a proposed rule to set position limits in the energy futures and options markets. The proposed rule, which will be published in the Federal Register after the meeting, will apply to contracts based on four commodities: light, sweet crude oil; Henry Hub natural gas; New York Harbor No. 2 heating oil; and New York Harbor gasoline blendstock.   The proposed rule, if finalized in its present form, would establish a framework for a new set of limits on speculative positions for all contract months combined, single month, and spot month. The proposal also would provide exemptions for bona fide hedging transactions and a risk management exemption for swap dealers. The comment period on the proposed rule will be 90 days.   For more information on the CFTC position limit proposal and current position limit policy, including links to policy documents released at today’s public meeting, please visit the position limit page on the FIA website at http://www.futuresindustry.org/position-limits-.asp FIA Voices Strong Opposition to Proposed FINRA Rule Limiting Leverage in Retail FX Trading The Futures Industry Association submitted a comment letter to the Securities and Exchange Commission on Jan. 4, 2010 urging the agency to reject a proposal by the Financial Industry Regulatory Authority that would set a limit on the amount of leverage used in retail trading of off-exchange currency products. The proposed limit is not coordinated with the current requirements set by the National Futures Association and would result in unequal treatment for firms that are dually registered as broker-dealers and futures commission merchants. The letter noted that broker-dealers are only one of many different types of financial institutions that are permitted to act as counterparties to retail customers with respect to over-the-counter retail forex transactions. These include futures commission merchants, forex dealers, banks and insurance companies. By proposing to fix a leverage limitation that is significantly lower than market convention, the proposed rule effectively would prohibit dually registered entities from competing in this line of business, the letter argued. “We respectfully submit that such a result is both self-defeating and unsound as a matter of regulatory policy,” the letter said. Instead the SEC and FINRA should pursue a “coordinated regulatory approach” with the other regulatory agencies with authority in this area, namely the Commodity Futures Trading Commission and the National Futures Association. “Such a coordinated regulatory approach would also provide a more level playing field, thereby assuring that no category of registrant…would have a competitive advantage,” the letter said. Click Here for the Comment Letter FIA, SIFMA Comment on FINCEN Proposals on Information Sharing Procedures      The Futures Industry Association and the Securities Industry and Financial Markets Association co-signed a Dec. 16 letter to the Treasury Department's Financial Crimes Enforcement Network. The two associations commented jointly on proposals regarding the expansion of special information sharing procedures that are intended to deter money laundering and terrorist activity. While FIA and SIFMA support efforts to combat terrorism and money laundering, they cautioned that the proposals could go beyond the intent of current law. Click Here for the Comment Letter (1.5 MB) FIA Supports KCBT Petition to Clear Wheat Swaps The Futures Industry Association filed a comment letter on Dec. 14 supporting a petition by the Kansas City Board of Trade related to the clearing of wheat calendar swaps that are traded over-the-counter. The KCBT has asked the Commodity Futures Trading Commission for permission to hold the positions and the associated customer margin in segregated accounts. In supporting this request, the FIA noted that the CFTC had approved similar requests from ICE Clear U.S. and CME Group. The FIA also reiterated prior comments that the CFTC should develop “objective standards” for determining what OTC cleared-only products may be included in segregation. Click Here for PDF FIA Statement on Passage of H.R. 4713 Washington, D.C. —Dec. 11, 2009—The Futures Industry Association today issued the following statement in response to the passage of H.R. 4713, The Wall Street Reform and Consumer Protection Act of 2009.           The Futures Industry Association has long favored closing gaps in the regulation of derivatives and promoting the value of the price discovery and hedging benefits provided by futures markets.  The legislation passed today by the House of Representatives is an important step in this process.  We look forward to working with the Senate to further improve this legislation. Lynch Amendment to H.R. 4173 on Clearing Washington, D.C.—Dec. 7, 2009—The Futures Industry Association today sent a letter to Congress urging lawmakers to oppose a clearinghouse-related amendment to H.R. 4173, the financial reform legislation now pending in the House of Representatives. The amendment, which is expected to be offered by Representative Stephen Lynch (D-Mass.), is designed to eliminate one group of market participants from the expected competition to clear over-the-counter swaps. In addition to reducing competition, the amendment would prevent clearing members that put up their capital to guarantee trades through clearing from having a meaningful voice in the operations of any clearinghouse. The House is scheduled to begin voting on H.R. 4173 this week. The legislation, the Wall Street Reform and Consumer Protection Act of 2009, contains measures to regulate the trading and clearing of OTC derivatives. Click Here for the Text of the FIA letter on the Lynch Amendment.   Friday, March 12 CFTC's Gensler and CME's Donohue tussle (Chicago Tribune blog)  149  CFTC to propose new co-location rule (Reuters)  111  MF Global CEO Sees Trouble With CFTC Retail Forex Proposal (DowJones)  84  CFTC eyeing rules for OTC markets, high-frequency traders (Futures Magazine)  61  Senators' plan would put derivatives under the Federal Reserve (The Hill)  54  ICE CEO: Multiple Clearinghouses Seen For Every Asset Class (DowJones)  48  CME CEO to CFTC chief: no OTC trading mandates (Reuters)  40  CFTC to study high-frequency futures trading (FT)  38  CFTC head scolds Wall Street for resisting reforms (Reuters)  36  A new Chicago brokerage plans to take uncertainty out of the weather (Medill)  36  Gensler: SEC, CFTC Still Developing Portfolio Margining Plan (WSJ blog)  33  Report Shows How, Collapsing, Lehman Hid Woes (NY Times)  32  2009 Volume Survey: Decline in the West, Surge in the East (Futures Industry)  27  OTC Swaps Clearing Must Be Open to All Firms, Gensler Says (Bloomberg)  24  Fannie Mae, Freddie Mac Will Clear Their Swaps -Overseer (DowJones)  23  Push for clearing houses fails to move leading oil traders (FT)  21  CME Rival ELX To List Fed-Funds Futures By End Of 2010 (DowJones)  20  Regulator faults Wall Street banks on derivatives (AP)  19  SEC head urges Congress to act on derivatives (AP)  19  BGC Can Hire Tullett Staff Next Month, Judge Says (Bloomberg)  18  Wall St 'allergic' to OTC changes (FT)  16  CBOE in first steps to $300m offering (FT)  16  London broker moves into structured credit (Financial News)  16  Derivatives transparency is key battleground (FT)  14  CBOE Parent Files $300 Million IPO (WSJ)  14  CBOE Files to Sell as Much as $300 Million in IPO (Bloomberg)  13  Four EU states call for inquiry into CDS market (Reuters)  12    Thursday, March 11 CME Tries To Keep Sealed Parts Of Lehman Collapse Probe (DowJones)  227  Newedge's DeWaal Sees Flaws In Exchange Rule-Change Process (DowJones)  201  ICE, CME clearing membership rules challenged for CDS (Reuters)  182  Treasuries, Eurodollars, Fed Funds Futures 'On The Table' For NYSE Liffe US (DowJones)  140  Film futures exchange set for launch (Finextra)  131  CFTC's Gary Gensler wants above-board approach to over-the-counter derivatives (Chicago Tribune)  128  CME and Eurex in cross-listing deals (FT)  122  Interest-rate swaps clearing rivalry heats up (Reuters)  118  Deutsche Boerse Developing New Trading Platform (DowJones)  113  NYSE Liffe U.S. completes sale of ownership stake to leading market participants (Automated Trader)  101  Lawsuits, poker and the death of a boutique bank (Reuters)  101  Derivatives debate splits US and Europe regulators (AP)  98  CFTC chairman attacks credit default swaps (Risk.net)  97  Read More E-clips » E-clips users: Please note that these news stories are drawn from independent sources. The FIA does not verify or endorse any of these articles, and takes no responsibility for their contents. Please contact Will Acworth at the FIA if you have any questions or suggestions regarding this service. (202) 466-5460