FIA Seeks No-Action Relief from Part 46 Reporting Requirements (March 26, 2013)
The Futures Industry Association on March 26 submitted a letter to the Commodity Futures Trading Commission’s division of market oversight seeking relief from Part 46 reporting requirements with respect to trades occurring in the contingent EFS and EOO markets for CME Group Clearport and ICE contracts and for energy swaps executed continent upon being promptly submitted to and accepted for clearing as swaps by ICE Clear Europe. In its letter, FIA stated that due to the contingent nature of the trades, CME Clearing and ICE Clear Europe already have relevant trade data that provides market transparency and is available to the CFTC for market surveillance purposes. “Absent relief, market participants are incurring (and will continue to incur) substantial costs to achieve a duplicative result that offers no discernible regulatory improvement over that existing trade data,” FIA wrote. FIA requested that the CFTC act promptly on its request in light of the imminent March 30 and April 10 compliance dates for swap dealers, major swap participants and end-users.
FIA Submits Comments on IOSCO Customer Protection Consultation (March 25, 2013)
The Futures Industry Association submitted comments to the International Organization of Securities Commissions regarding its consultation, which proposes enhanced customer protections. FIA said it generally supports the principles, which set out to clarify the roles of intermediaries and regulators in enhancing the protection of client assets. FIA noted that it has taken a leading role in a parallel project underway in the U.S.
While FIA gave its support for IOSCO’s overall efforts, it raised concerns with two proposals. One proposal would require intermediaries, such as futures commission merchants, to highlight to their customers the material differences in client asset protection and/or insolvency regimes outside of their home jurisdictions. “We agree that intermediaries should advise clients that, if they trade on a board of trade outside of their home jurisdiction and their funds are held outside of their home jurisdiction, their funds will be subject to the client asset protection and/or insolvency regime of the foreign jurisdiction. We further agree that any such disclosure should be in clear, concise and understandable. FIA’s Frequently Asked Questions are in accord with these recommendations,” FIA said. But FIA cautioned that the intermediary is not in the position of a legal advisor to its clients.
“Intermediaries do not purport to provide legal advice to their clients, and regulators should not require that they do so,” FIA said, recommending that IOSCO maintain and post on its website a description of the client asset protection laws and regulations in the jurisdictions of IOSCO.
FIA also raised concerns about a proposal that would require intermediaries to be able to provide client asset calculations at any time. “Systems employed by FCMs and other intermediaries currently do not permit at anytime calculations,” FIA said. “The backbone for all applicable data related to customer accounts is the end-of-day batch processing, which occurs overnight following the close of trading each day.” FIA explained that margin and commission processing, including all exchange and clearing organization fee calculations, can take several hours to run. “Intraday runs would be a major drain on technology resources and would cause many other essential systems to slow or fail,” FIA warned, adding that such a requirement is even more difficult in the case of bunched orders.
FIA Submits Comment Letter in Response to CFTC Enhanced Customer Protections Proposal (Feb. 15, 2013)
FIA Outlines Views on Position Aggregation Requirements and Exemptions (Jan. 15, 2013)
FIA sent a letter to the Commodity Futures Trading Commission on Jan. 15 outlining its views on position aggregation requirements and exemptions. The letter was intended to provide staff with additional information for consideration as the agency develops a proposal in this area as part of a broader effort to draft a new position limits rule.