Comment Letters
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FIA Supports CFTC’s Proposed Residual Interest Amendment (Dec. 17, 2014)
FIA filed a comment letter with the CFTC on Dec. 17 expressing its support for the CFTC’s proposed amendment to its residual interest requirements.  

Under the proposed amendment, the deadline for depositing residual interest could not be accelerated without the CFTC going through a rule-making process and gathering input from the industry. The current rule allows the deadline to be changed automatically to the time of settlement at the end of 2018.  

In its letter, FIA emphasized the importance of giving customers an opportunity to comment on changes to the deadline. FIA said that the current deadline, which is 6:00 p.m. on the business day after the trade date, “strikes the proper balance” between protecting customer funds and alleviating financial and operational burdens on customers and their clearing firms. FIA also said that it looks forward to participating in the study that the CFTC will undertake to determine whether it would be practicable to move the deadline earlier.

FIA Global Requests Segregated Margin Be Excluded from Basel III Capital Requirements (Nov. 20, 2014)
FIA Global sent a letter to the Basel Committee on Banking Supervision yesterday urging the committee to consider how segregated margin is treated in the leverage calculations that determine bank capital requirements. FIA Global was joined on the letter by two other global trade associations—the World Federation of Exchanges and CCP12—as well as four global central clearing parties in their own rights: ICE, CME Group, LCH Clearnet Group, and Eurex Group.

This letter sets forth the reasons why—in the context of a bank exposure created by a cleared derivatives transaction—the Basel III leverage ratio should recognize the exposure-reducing effect of margin that is segregated, because segregated margin cannot be used to increase the bank’s leverage.  The Global Trade Associations and CCPs are deeply concerned about the failure of the leverage ratio to recognize the exposure-reducing effect of segregated margin in the limited context of centrally cleared derivatives transactions. If not clarified or amended, the failure of the leverage ratio to recognize the exposure-reducing effect of segregated margin—compounded in the case of such margin received as cash—will likely have seriously negative effects on cleared derivatives markets and market participants, including end users.

FIA Responds to FinCEN Ownership Identification Rule (Oct. 2, 2014)

The Financial Crimes Enforcement Network, the anti-money laundering arm of the U.S. Treasury Department, issued a proposal on July 30 that would require financial institutions to look through the companies for which they provide services and identify their owners. One of the provisions would require futures commission merchants and introducing brokers to identify and verify any individual who owns 25% or more of a legal entity that is a customer.

On Oct. 2, FIA filed a comment letter responding to the proposed rule. The comment letter questions the need to make customer due diligence a “fifth pillar” of anti-money laundering program requirements; requests additional exemptions to the customer definition; suggests additions to the text of the rule; proposes enhancements to customer due diligence procedures; asks for clarification on the treatment of intermediated accounts; and recommends expanding the implementation time frame to 24 months.

FIA Affiliates Respond to MiFID II Consultation (Aug. 1, 2014)

FIA, FIA Europe and FIA European Principal Traders Association have submitted two sets of responses to the European Securities and Markets Authority’s consultation on MiFID II, the overhaul of the EU’s rules for markets in financial instruments. FIA, FIA Europe and FIA EPTA filed a joint response focused on microstructural issues such as direct market access and algorithmic and high-frequency trading. FIA Europe filed a separate response focusing on issues such as indirect clearing, non-discriminatory access, position limits for commodities, and trading reporting.

 FIA Associations Response to MiFID II Consultation Paper 
(response begins on p. 34)

 FIA Associations Response to MiFID II Discussion Paper
(response begins on p. 31)

 FIA Europe Response to MiFID II Consultation Paper
(response begins on p. 42)

 FIA Europe Response to MiFID II Discussion Paper
(response begins on p. 20)

FIA and FIA PTG Comment on CFTC Market Surveillance Program (Aug. 4, 2014)
Responding to a request from the Technology Advisory Committee of the Commodity Futures Trading Commission, FIA and FIA Principal Traders Group submitted a joint letter on Aug. 4 suggesting that the CFTC should consider five principles as it examines ways to reform its market surveillance and oversight in a “technologically adept way.” The five principles are: 
  • Continue to delegate “front-line surveillance” to exchanges; 
  • Increase the analytical expertise of the CFTC staff; 
  • Use existing reports to enhance cross-market surveillance; 
  • Avoid the duplication of existing systems built or commissioned by exchanges 
  • Maintain data privacy and cybersecurity

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