FIA Files Comment Letter on Proposed Position Limits Rule (Feb 7, 2014)
On Feb. 7 FIA filed a 48-page comment letter in response to the CFTC’s proposed position limits rule. FIA said that various aspects of the proposed rule would have a “negative impact” on price discovery and liquidity and would “significantly restrict” the ability of market participants to rely on the derivatives markets to hedge risk. FIA urged the CFTC to defer imposing position limits until after it has collected and analyzed the data necessary to make an empirical finding that 1) speculative position limits are “necessary” to “diminish, eliminate or prevent” the burden on interstate commerce caused by excessive speculation, and 2) that the proposed limit levels are “appropriate”. FIA also urged the CFTC to modify the proposal in a number of ways, and commented that there are less costly and less restrictive alternatives to the proposed compliance and reporting requirements that would still achieve the CFTC’s objectives, and urged the CFTC to adopt a number of specific changes if it decides to proceed with the proposed rule.
FIA Files Comment Letter on Proposed Aggregation Rule (Feb. 6, 2014)
On Feb. 6 FIA filed a 19-page comment letter in response to the CFTC’s proposed rule regarding the aggregation of positions. FIA said it generally supports the proposal because it incorporates or addresses many of the comments and recommendations made by FIA and other market participants concerning prior proposed amendments to the aggregation rules. In particular FIA said it supports the recognition that certain types of ownership structures should be exempted from aggregation. FIA also urged the CFTC to provide a “reasonable transition period” after the rule is finalized and recommended a number of additional clarifications and amendments to address the practical impact of the proposed rule.
FIA Requests Confirmation of Interpretation of CFTC Rule 1.73 Regarding SEFs and Bunched Orders (Jan. 31, 2014)
On Jan. 31 FIA submitted a letter to CFTC staff seeking confirmation that Rule 1.73 does not apply to agency-executed transactions on swap execution facilities. "Because the clearing FCM has the opportunity to screen the agency-executed swap transaction on a SEF for compliance with its limits before the transaction is executed and accepted for clearing, the executing agent has no need to screen swap orders for compliance with these limits," FIA wrote.
FIA also requested confirmation that bunched orders will not be subject to a provision in Rule 1.73 that applies to “give-ups” involving individual customers. FIA explained that because bunched orders involve multiple customers and do not identify at the time of execution the customers on whose behalf the order is executed or the amount of the order that is due to a particular customer, an initial clearing firm would not be able to apply and screen an individual customer limit.
FIA asks CFTC for Guidance on Rules 1.20(e)(3) and 30.7(c) (Jan. 7, 2014)
On Jan. 7, FIA submitted a request to the Commodity Futures Trading Commission for interpretative guidance regarding compliance with Rules 1.20(e)(3) and 30.7(c), both of which relate to certain operational requirements that apply to the handling of customer funds by futures commission merchants. FIA also asked the CFTC to provide FCMs with 60 days of additional time so that they can establish the policies and procedures necessary to implement the interpretative guidance for both rules.