For Release: March 23, 2009
CFTC Approves Final Rules and Rule Amendments to Increase Oversight of ECMs
Washington, DC – On March 16, 2009, the Commodity Futures Trading Commission (CFTC or Commission) approved final rules and rule amendments that increase the Commission’s oversight of exempt commercial markets (ECMs). The rules implement provisions of the CFTC Reauthorization Act of 2008, which created a new regulatory category—ECMs with significant price discovery contracts (SPDCs)—and subjected these electronic trading facilities to additional regulatory and reporting requirements. Publication of the rules in the Federal Register is expected on March 23, 2009; the rules will become effective on April 22, 2009.
“This is a step in the right direction to increase transparency and accountability in these markets so we can better protect market participants and the public at large,” said CFTC Acting Chairman Michael V. Dunn. “The final rules put in place the framework in which we will exercise our new authority to police these important contracts.”
The rules revise the information-submission requirements applicable to ECMs; establish procedures and standards by which the CFTC will determine that an ECM contract performs a significant price discovery function; provide guidance with respect to compliance with nine statutory core principles for ECMs with SPDCs; and amend existing regulations applicable to registered entities in order to clarify that such regulations are now applicable to ECMs with SPDCs.
In response to the Commission’s Notice of Proposed Rulemaking, several commenters raised concerns about the proposed acceptable practices for Core Principle IV (Position Limits or Accountability) relating to accounting for uncleared trades, and recommended that the Commission adopt a single accountability level for both cleared and uncleared trades. These and related comments with respect to uncleared trades raise complex issues which, in the Commission’s view, warrant further consideration. Accordingly, the Commission has determined not to make final at this time those aspects of the proposed Core Principle IV guidance and acceptable practices related to uncleared trades, pending additional study of these comments. The Commission expects to complete this review in the coming months and separately issue a rulemaking proposing guidance and acceptable practices applicable to uncleared trades.
R. David Gary
Last Updated: March 23, 2009