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Article
Publication date: 21 November 2008

Susan C. Ervin, Philip T. Hinkle, Brendan C. Fox and Alan Rosenblat

The purpose of this paper is to summarize key provisions of the CFTC Reauthorization Act of 2008 which reauthorizes the Commodity Futures Trading Commission (CFTC) through…

Abstract

Purpose

The purpose of this paper is to summarize key provisions of the CFTC Reauthorization Act of 2008 which reauthorizes the Commodity Futures Trading Commission (CFTC) through the year 2013 and substantially enhances the CFTC's authority in several areas.

Design/methodology/approach

The paper discusses the enhancements to the CFTC's authority over off‐exchange retail foreign currency transactions; explains the expanded CFTC oversight of significant price discovery contracts; and summarizes other amendments to the Commodity Exchange Act (CEA), including expansion of CFTC anti‐fraud authority over principal‐to‐principal futures transactions, modification of civil and criminal penalties for certain violations of the CEA, required CFTC and Securities and Exchange Commission (SEC) rulemaking on: risk‐based portfolio margining for security options and security futures products; and trading of futures on broad‐based indexes of foreign equities, and other technical amendments.

Findings

This paper notes that the key provisions of the CFTC Reauthorization Act substantially enhances the CFTC's regulatory authority in several areas and provides an introduction to those provisions.

Originality/value

The paper is an introduction to the new regulatory authority of the CFTC by experienced lawyers specializing in financial services.

Details

Journal of Investment Compliance, vol. 9 no. 4
Type: Research Article
ISSN: 1528-5812

Keywords

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Article
Publication date: 1 January 2001

KENNETH M. ROSENZWEIG

This new act has substantially changed the legal landscape for the futures markets as well as the over‐the‐counter securities markets. The author explores this act with…

Abstract

This new act has substantially changed the legal landscape for the futures markets as well as the over‐the‐counter securities markets. The author explores this act with particular attention in the new provision allowing for the trading of futures on individual stocks.

Details

Journal of Investment Compliance, vol. 1 no. 4
Type: Research Article
ISSN: 1528-5812

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Article
Publication date: 23 September 2019

Alice S. Fisher, Douglas K. Yatter, Douglas N. Greenburg, William R. Baker III, Benjamin A. Dozier and Robyn J. Greenberg

This paper aims to analyze the March 6, 2019 enforcement advisory in which the Division of Enforcement (Division) of the US Commodity Futures Trading Commission (CFTC or…

Abstract

Purpose

This paper aims to analyze the March 6, 2019 enforcement advisory in which the Division of Enforcement (Division) of the US Commodity Futures Trading Commission (CFTC or Commission) announced that it will work alongside the US Department of Justice (DOJ) and other agencies to investigate foreign bribery and corruption relating to commodities markets.

Design/methodology/approach

This paper explains the enforcement advisory and outlines key considerations for industry participants and their compliance teams, including the CFTC’s plan to investigate in parallel with other enforcement authorities, an expansion of the CFTC’s existing self-reporting, cooperation and remediation policy to address foreign corruption and the CFTC’s focus on market and economic integrity, and provides guidelines for commodities companies concerning anti-corruption compliance and training programs, investigating potential incidents of bribery and corruption, reporting obligations under the Commodity Exchange Act (CEA) and CFTC regulations, voluntary reporting of incidents of foreign corruption and whistleblowing.

Findings

The CFTC announcement adds a new dimension to an already crowded and complex landscape for anti-corruption enforcement. A range of industries, including energy, agriculture, metals, financial services, cryptocurrencies and beyond, must now consider the CFTC and the CEA when assessing global compliance and enforcement risks relating to bribery and corruption.

Originality/value

Expert guidance from lawyers with broad experience in white collar defense, investigations, financial services, securities, commodities, energy and derivatives.

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Article
Publication date: 8 October 2019

Nikiforos Mathews and Jonas Robison

The US Commodity Futures Trading Commission (CFTC), to date, has not directly addressed how liability for Commodity Exchange Act (CEA) violations involving blockchain or…

Abstract

Purpose

The US Commodity Futures Trading Commission (CFTC), to date, has not directly addressed how liability for Commodity Exchange Act (CEA) violations involving blockchain or distributed ledger technology should be allocated among the various parties involved in the distributed ledger network, such as the network itself, persons running consensus nodes, developers building applications on the platform, and businesses and end users using such applications. This article discusses recent statements by CFTC Commissioner Brian Quintenz regarding this issue and the approach that the CFTC may take going forward.

Design/methodology/approach

This article examines the allocation of liability in the context of smart contracts that may violate the CEA. The article discusses how the CFTC, despite its significant focus in recent years on virtual currency and blockchain, has not addressed the issue of liability allocation directly. Recent remarks by Commissioner Quintenz may shed light on the CFTC’s future approach.

Findings

This article finds that liability allocation questions may become increasingly pressing as smart contracts that potentially violate the CEA proliferate, possibly exposing a broad range of parties involved in a distributed ledger network to liability. To the extent that Commissioner Quintenz’s recent remarks are indicative, the CFTC ultimately may adopt a foreseeability standard in determining liability.

Practical implications

Applications of distributed ledger technology (DLT) are ever-expanding, continually posing novel CFTC regulatory issues. This is especially the case with respect to smart contracts that may be subject to CFTC jurisdiction. Parties involved in such applications should be mindful of potential liability.

Originality/value

Practical guidance from experienced finance and derivatives lawyers with strong CFTC expertise.

Details

Journal of Investment Compliance, vol. 20 no. 3
Type: Research Article
ISSN: 1528-5812

Keywords

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Article
Publication date: 1 February 1995

Edward Swan

One of the principal goals of derivatives regulation is to prevent market manipulation. Manipulation destroys investor confidence, leads to reduction of trading activity…

Abstract

One of the principal goals of derivatives regulation is to prevent market manipulation. Manipulation destroys investor confidence, leads to reduction of trading activity, and reduces the overall prosperity and revenue generated by market activity. To avoid these dire consequences, those societies committed to a market economy generally impose regulation to prevent interference with and distortion of natural market forces of supply and demand.

Details

Journal of Financial Crime, vol. 3 no. 1
Type: Research Article
ISSN: 1359-0790

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Article
Publication date: 28 June 2013

Michael M. Philipp and Ignacio A. Sandoval

The purpose of this paper is to describe the separate but related relief issued by the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange

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Abstract

Purpose

The purpose of this paper is to describe the separate but related relief issued by the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC) that permits the commingling and portfolio margining of centrally cleared credit default swap (CDS) positions held in customer accounts.

Design/methodology/approach

The paper provides a brief overview of the bifurcated approach taken to the regulation of CDS; explains the benefits of portfolio margining and the need for portfolio margining relief; and provides an overview of the relief provided by the SEC and CFTC.

Findings

The relief provided by the SEC and CFTC may contribute to the efficient use and allocation of capital by market participants; however, the SEC's and CFTC's orders are limited in scope only to CDS products, and the viability of the relief for CDS products will depend upon SEC approval of the margin methodology used by brokers to set margin levels for their customers.

Originality/value

The paper provides practical insights into first of its kind regulatory relief permitting commingling and portfolio margining of centrally cleared derivatives for customer accounts and the requirements incumbent on a market intermediary when implementing a program to commingle and portfolio margin centrally cleared CDS positions.

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Article
Publication date: 23 November 2012

Anthony R.G. Nolan, Susan I. Gault‐Brown and Lawrence B. Patent

The purpose of this paper is to explain a final rule adopted by the SEC and the CFTC that clarifies Dodd‐Frank Act definitions for the new terms “swap dealer,”…

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127

Abstract

Purpose

The purpose of this paper is to explain a final rule adopted by the SEC and the CFTC that clarifies Dodd‐Frank Act definitions for the new terms “swap dealer,” “security‐based swap dealer,” “major swap participant” and “major security‐based swap participant (together “regulated swap entities”), and an amended definition of the term “eligible contract participant,” and the implications of those definitions.

Design/methodology/approach

The paper explains the definitions of “swap dealer,” “security‐based swap dealer,” “major swap participant” and “major security‐based swap participant” and how those definitions affect market participants; extraterritorial reach of regulated swap entity regulation; and the amended definition of the term “eligible contract participant.”

Findings

The adoption of the Final Rule is important to swap market participants because it provides firm definitional guidance on the criteria that make one a regulated swap entity subject to registration with the CFTC and/or the SEC and the many responsibilities, obligations, and restrictions that come with substantive regulation, including capital and margin requirements, business conduct rules, conflict of interest rules, chief compliance officer requirements, reporting obligations, and recordkeeping requirements.

Originality/value

The paper provides practical guidance from experienced financial services lawyers.

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Article
Publication date: 8 June 2012

James M. Cain, Daphne G. Frydman, David Roby, Michael Koffler and Raymond A. Ramirez

The purpose of this paper is to explain legislative and regulatory changes and related developments that will be of interest to hedge funds and other private funds as they…

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212

Abstract

Purpose

The purpose of this paper is to explain legislative and regulatory changes and related developments that will be of interest to hedge funds and other private funds as they traverse the shifting regulatory landscape in 2012.

Design/methodology/approach

The paper provides a general overview of the new regulatory regime that the Dodd‐Frank Act imposes on over‐the‐counter (OTC) derivatives; describes the rescission of a regulatory exclusion from the commodity pool operator (CPO) definition that was previously available to registered investment companies and the repeal of an exemption from CPO registration requirements for operators of funds whose shares are exempt from registration under the Securities Act of 1933; discusses proposed changes to CPO and commodity trading advisor (CTA) compliance requirements; discusses Dodd‐Frank Act changes to existing securities laws and regulations, including with respect to large trader reporting and investment advisers; highlights some of the concerns raised by MF Global, Inc.’s collapse; and describes recent tax law developments.

Findings

The paper reveals that the Dodd‐Frank Act significantly alters the space within which hedge funds and other private funds currently operate.

Practical implications

Whereas the majority of the regulations to implement the Dodd‐Frank Act have yet to become effective, federal regulators are working diligently to implement their mandates and hedge funds and other private funds should begin preparing to comply with the new Dodd‐Frank Act requirements now.

Originality/value

The paper provides expert guidance by experienced securities, derivatives and tax lawyers.

Details

Journal of Investment Compliance, vol. 13 no. 2
Type: Research Article
ISSN: 1528-5812

Keywords

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Article
Publication date: 11 September 2009

Howard W. Goldstein

The purpose of this paper is to explain the changes to the US federal money laundering and criminal fraud statutes contained in the Fraud Enforcement and Recovery Act of…

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256

Abstract

Purpose

The purpose of this paper is to explain the changes to the US federal money laundering and criminal fraud statutes contained in the Fraud Enforcement and Recovery Act of 2009 (“FERA”)

Design/methodology/approach

The paper explains how FERA extends the definition of “proceeds” under the statute to include gross receipts of illegal activity, how the definition of a financial institution is revised to include a mortgage lending business, and how the federal securities fraud statute is expanded to apply to frauds involving commodity futures and options.

Findings

Any prior ambiguity as to the meaning of “proceeds” has now been unequivocally resolved; alleged money launderers will no longer be able to defend themselves by arguing that they committed unprofitable criminal activities. The classification as a “financial institution” matters because a number of federal criminal statutes either only apply to financial institutions or set out different penalties or statutes when a financial institution is affected by a generally applicable crime. Under FERA, henceforth frauds involving options and futures in commodities will violate the securities fraud statute.

Originality/value

The paper presents practical guidance by an experienced white‐collar criminal defense lawyer.

Details

Journal of Investment Compliance, vol. 10 no. 3
Type: Research Article
ISSN: 1528-5812

Keywords

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Article
Publication date: 6 November 2017

David S. Mitchell, Robert M. McLaughlin, William J. Breslin, Victoria T. Mazgalev and Scott I. Golden

To provide an overview of the Commodity Futures Trading Commission’s (the “CFTC” or “Commission”) recent amendments to CFTC Rule 1.31, which sets forth recordkeeping…

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155

Abstract

Purpose

To provide an overview of the Commodity Futures Trading Commission’s (the “CFTC” or “Commission”) recent amendments to CFTC Rule 1.31, which sets forth recordkeeping requirements for all records required to be kept pursuant to the Commodity Exchange Act (“CEA”) and Commission regulations.

Design/methodology/approach

This article discusses the significant May 2017 amendments to CFTC Rule 1.31 and the practical impact of these amendments for entities subject to the rule’s requirements.

Findings

The CFTC’s recordkeeping amendments do not impose any new substantive recordkeeping requirements, but modernize and make technology neutral the form and manner in which regulatory records must be kept. By eliminating a number of prescriptive and outdated requirements, the amendments should provide greater flexibility to “records entities” to adopt new technologies in response to evolving technological developments.

Originality/value

Practical guidance from experienced commodities, futures and derivatives lawyers.

1 – 10 of 130