FIA Comments on CME Request to Amend Rule 538 Governing Exchange for Related Positions (Dec. 6, 2013)
On Dec. 6, FIA submitted a comment letter to the Commodity Futures Trading Commission regarding the CME Group’s amended request for approval to amend Rule 538, which governs exchange for related position transactions. In the letter, FIA offered several recommendations and asked for further changes to the CME filing. In particular, FIA opposed the CME’s proposed requirement that confirmations on cash FX transactions reflect the carrying clearing member and account number of an account controller’s customers. FIA also expressed concern about the adverse effects of CME’s proposal to prohibit swaps executed on a swap execution facility from constituting a permissible component of an EFRP transaction.
FIA Comments on CME’s Proposed Elimination of EFRP Trades (Oct. 25, 2013)
On Oct. 25, the Futures Industry Association filed a comment letter with the Commodity Futures Trading Commission in response to a proposal from CME Group to eliminate the use of transitory exchange-for-related-position (EFRP) transactions and make various other changes to CME’s Rule 538. In its letter FIA asked the CFTC to defer consideration of CME’s proposal until after the CFTC issues rules implementing the trade execution requirement in Core Principle 9 as well as rules related to block futures trades. By considering all of these rules together, regulators will be better able to coordinate the rules and avoid inhibiting access to futures markets, particularly with respect to less liquid markets.
FIA Recommends Excluding Client Clearing from Basel III Leverage Ratio (Sept. 20, 2013)
The Futures Industry Association warned the Basel Committee in a Sept. 20 letter that its proposed leverage ratio framework overstates the risk exposure created by clearing derivatives trades on behalf of clients. This would lead to "punitive capital requirements" that would contravene the intent of the clearing mandate for swaps and would threaten to disrupt the existing market for exchange-traded futures and options. FIA urged the committee to address this problem by excluding client clearing from its proposed treatment of derivatives. Alternatively, FIA recommended that the measurement of risk exposures should exclude the "CCP leg" of the transaction and that the "client leg" should be measured using a methodology that captures the margin and netting benefits of central clearing.
FIA Warns SEC that Money Market Fund Reform May Impact Futures Collateral Management (Sept. 17, 2013)
The Futures Industry Association submitted comments on Sept. 17 regarding the Securities and Exchange Commission’s proposed amendments to its money market mutual fund rules. FIA cautioned that the SEC proposals may inhibit a futures commission merchant from investing in money market mutual funds or a designated clearing organization from accepting money market mutual funds as margin deposits.
FIA Special Report: CFTC Issues Concept Release on Automated Trading (Sept. 9, 2013)
The Commodity Futures Trading Commission on Sept. 9 issued a concept release on risk controls and system safeguards for automated trading in the U.S. derivatives markets. The CFTC said the concept release will serve as a platform for cataloguing existing industry practices, determining their efficiency and implementation to date, and evaluating the need for additional measures. Comments are due 90 days from publication in the Federal Register.