March 24, 2014
Washington, DC — The Commodity Futures Trading Commission (Commission) is accepting public comment, pursuant to § 40.6(c)(2) of the Commission’s regulations, on certain rule amendments self-certified by ICE Swap Trade, LLC (ICE Swap Trade) concerning the treatment of “package transactions.”
Pursuant to § 40.6(c)(1) of the Commission’s regulations, on February 26, 2014, the Commission stayed ICE Swap Trade’s self-certification of the definition of “Packaged Transaction” and Rules 701(a) and (k) in submission no. 14-02.
Comments regarding the certification should be submitted on or before April 23, 2014.
The Commission asks that the public consider the following questions in preparing comments regarding the certification:
1. What are the current prevailing market conventions regarding the execution of package transactions? Please include detailed explanations.
2. Do package transactions comply with the definition of “block trade” set forth in § 43.2 of the Commission’s regulations? As defined in § 43.2, a block trade is a publicly reportable swap transaction that (1) involves a swap that is listed on a registered swap execution facility (SEF) or designated contract market (DCM); (2) occurs away from the SEF’s or DCM’s trading system or platform, but pursuant to the rules of the SEF or DCM; (3) has a notional or principal amount at or above the appropriate minimum block size applicable to such swap; and (4) is reported subject to the rules and procedures of the registered SEF or DCM and the rules prescribed in part 43 of the Commission’s regulations. Please include detailed explanations.
3. Please identify each legal, economic and business rationale for permitting package transactions to be executed as block trades, as defined in § 43.2 of the Commission’s regulations. In particular, please identify each rationale for permitting package transactions to occur away from a registered SEF or DCM’s trading system or platform, but pursuant to the rules of a SEF or DCM. Please include detailed explanations.
4. Rule 701(a) states that block trades, among other requirements, must “satisfy such minimum notional requirements [pursuant to Commission regulations] or be a Packaged Transaction. . . .” Please identify each legal, economic, and business rationale for permitting package transactions to be executed as block trades, in particular without fulfilling the appropriate minimum block sizes prescribed under part 43 of the Commission’s regulations. Please include detailed explanations.
5. Section 43.5(d) of the Commission’s regulations provides certain time delays for the public dissemination of transaction and pricing data for block trades that are executed pursuant to the rules of a registered SEF or DCM. Please identify each legal, economic, and business rationale for providing such time delays to package transactions. Please include detailed explanations.
6. Rule 701(k) defines a “Packaged Transaction” as a transaction that, among other things, consists of offsetting components that are approximately equivalent in size (measured by the amount of risk of fluctuation of a specified asset). Please provide comment on these criteria, in particular with respect to the degree of size equivalence that would be required between the components.
Comments may be submitted electronically through the CFTC’s Comments Online process. All comments will be posted on the Commission’s website.
Last Updated: March 24, 2014