CFTC – Global Investment Law Watch

End of Summer Pool Party: CFTC Approves Final Rule Amending 4.7 Regulatory Relief for CPOs and CTAs

Sep 17 2024

By: Cheryl L. Isaac, Matthew J. Rogers, and Benjamin C. Skillin

On 12 September 2024, the Commodity Futures Trading Commission (CFTC) published a Final Rule impacting registered commodity pool operators (CPOs) and commodity trading advisors (CTAs) relying on the regulatory relief provided under CFTC Regulation 4.7. “Registration light,” as Regulation 4.7 is sometimes known, provides reduced disclosure, reporting and recordkeeping obligations for CPOs and CTAs that limit sales activities to “qualified eligible persons” (QEPs).

After Approval at DC District Court, Appeals Court Halts Trading Event Contracts Based on Election Outcomes

Sep 13 2024

By: Cliff C. Histed, Cheryl L. Isaac, and Wiley F. Cole

On 12 September 2024, the US District Court for the District of Columbia ruled in KalshiEx LLC v. CFTC that designated contract markets may list event contracts whose payouts are tied to the outcome of elections. The court’s order, which granted summary judgment to KalshiEx LLC (Kalshi), held that the Commodity Futures Trading Commission’s (CFTC) interpreted its own regulations too broadly and that registered derivatives exchanges such as Kalshi may offer election outcome event contracts for trading.

CFTC Releases Artificial Intelligence Report

May 09 2024

By: Matthew J. Rogers and Maxwell J. Black

On 2 May 2024, the Commodity Futures Trading Commission’s (CFTC) Technology Advisory Committee (Committee) released a report entitled Responsible AI in Financial Markets: Opportunities, Risks & Recommendations. The report discusses the impact and future implications of artificial intelligence (AI) on financial markets and further illustrates the CFTC’s desire to oversee the AI space.

Kicked Out of the Club: NFA Orders Commodity Pool Operator Not to Reapply for NFA Membership

Apr 18 2024

By: Matthew J. Rogers and Benjamin C. Skillin

On 10 April 2024, the National Futures Association’s (NFA) Business Conduct Committee (BCC) issued an order against 50.ai Investments LLC, a former NFA Member commodity pool operator and forex firm. The order stipulates that 50.ai Investments may not reapply for NFA membership or act as a principal of an NFA Member at any time in the future due to violating a suite of NFA compliance rules.

CFTC Proposes Rule to Address Margin Adequacy and Treatment of Separate Accounts by FCMs

Feb 23 2024

By: Matthew Rogers and Benjamin Skillin

On February 20, 2024, the CFTC approved a proposed rule that would apply a margin adequacy requirement to all futures commission merchants (FCMs), with respect to their customers. The new requirement—titled Regulation 1.44—is designed to ensure that an FCM does not permit a customer to withdraw funds from its account if the remaining balance would be insufficient to meet the customer’s initial margin requirements.

ICYMI: Integrity Council Launches Global Benchmark and Core Carbon Principles for Voluntary Carbon Markets

Aug 18 2023

By: Cheryl Isaac and Christine Mikhael

In case you missed it: late last month, the Integrity Council for the Voluntary Carbon Market (“ICVCM”) launched its Core Carbon Principles (CCPs) and Program-level Assessment Framework (Framework). With the publication of these new standards (developed with the input of hundreds of stakeholders in the voluntary carbon markets), we now have a set of fundamental principles for high-quality credits that create a verifiable climate impact, and a framework for determining whether carbon credit programs are eligible to label themselves as being in compliance with the CCPs.

United States: CFTC Proposes to Broaden Scope of Eligible Collateral for Initial Margin

Jul 28 2023

By: Kenneth Holston, Cheryl Isaac, Matthew Rogers and Gustavo De La Cruz Reynozo

On July 26, 2023, the Commodity Futures Trading Commission (“CFTC”) proposed an amendment (“Proposal”) to, among other things, expand the universe of eligible collateral for the CFTC’s initial margin (“IM”) requirements for uncleared swaps. The Proposal would result in swap dealers that are not subject to prudential regulation being able to use a broader range of money market funds (“MMFs”) and similar funds as collateral to meet their uncleared swap IM requirements under CFTC Regulation 23.156(a)(1)(ix).

United States: CFTC Orders 11 Banks to Pay Over $710 Million for Illegal Use of Texting Apps

Oct 03 2022

By: Cheryl L. Isaac and Matthew J. Rogers

On September 27, 2022, the Commodity Futures Trading Commission (“CFTC”) announced the settlement of charges against the swap dealer (“SD”) and futures commission merchant (“FCM”) affiliates of 11 financial institutions totaling more than $710 million. The action, filed and settled on the same day and brought in tandem with a related Securities and Exchange Commission (“SEC”) action, charged the institutions with failing to meet certain CFTC recordkeeping requirements. Specifically, the Commission determined that the SDs / FCMs failed to stop their employees from communicating internally and externally using unapproved communication methods such as WhatsApp or Signal.

United States: CFTC Reaches Settlement with Oil and Natural Gas Advisor for Failure to Register as a SEF

Sep 29 2022

By: Cheryl L. Isaac and Spencer D. Warkentin

On September 26, 2022, amidst a flurry of other enforcement actions, the Commodity Futures Trading Commission (“CFTC”) announced the settlement of its administrative action against Asset Risk Management, LLC (“ARM”) in the amount of $200,000. The CFTC found that ARM operated an unregistered swap execution facility (“SEF”) for a period of 5 years, from September 2017 to the present.

United States: CFTC Proposes New Rules for Derivatives Clearing Organizations

Aug 23 2022

By: Cheryl L. Isaac and Matthew F. Phillips

On July 27, 2022, the Commodity Futures Trading Commission (“CFTC”) proposed a series of amendments to the Commodity Exchange Act (the “Exchange Act”) designed to enhance its governance standards for Derivatives Clearing Organizations (“DCOs”).

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