CFTC Proposes Rules on Large-trader Ownership and Control Forms | Practical Law

CFTC Proposes Rules on Large-trader Ownership and Control Forms | Practical Law

CFTC proposed new rules and related forms to enhance its identification of futures and swap market participants.

CFTC Proposes Rules on Large-trader Ownership and Control Forms

Practical Law Legal Update 6-520-5164 (Approx. 3 pages)

CFTC Proposes Rules on Large-trader Ownership and Control Forms

by PLC Finance
Published on 26 Jul 2012 • USA (National/Federal)
CFTC proposed new rules and related forms to enhance its identification of futures and swap market participants.
On June 28, 2012, the CFTC proposed rules and related forms to enhance its ability to identify futures and swap market participants. The new rules would:
  • Expand the CFTC's large trader reporting rules and forms to help the CFTC identify "volume threshold accounts," defined as individual trading accounts that trigger volume-based derivatives reporting thresholds on a "registered reporting market" (a designated contract market (DCM) or swap execution facility (SEF)) regardless of whether the activity results in reportable positions. These volume threshold accounts can include trades in futures, options on futures, swaps and any other products traded on or subject to the rules of a DCM or SEF.
  • Enhance and automate the CFTC's existing derivatives position and transaction reporting programs by requiring the electronic submission of trader identification and market participant data on amended Forms 102 and 40, and on new Form 71.
  • Allow the CFTC to collect derivatives trading account ownership and control information through a dedicated ownership and control report for trading accounts that are active on reporting DCMs or SEFs. This new proposed rule replaces a previously proposed rule, which has now been withdrawn.
The proposed rules are aimed to help the CFTC better:
  • Deter and prevent market manipulation and abusive or disruptive trading practices.
  • Perform risk-based monitoring and surveillance between related accounts.
The new information collection would help reveal connections of ownership or control between derivatives trading accounts that might otherwise appear unrelated. The proposed rules also include swap-related considerations in connection with the CFTC's new large-trader reporting rules for swaps (see Legal Update, CFTC Grants Temporary Large-trader Swap Reporting Exemption).
For more information on large-trader derivatives position reporting under the Dodd-Frank Act, see Practice Note, Summary of the Dodd-Frank Act: Swaps and Derivatives: Large-trader Position Data Reporting for Physical Commodity Swaps.