Statement of Support of Chairman Timothy Massad Final Rule on Records of Commodity Interest and Related Cash or Forward Transactions
December 18, 2015
Today, the Commission is adopting significant changes to a rule that will reduce recordkeeping obligations for commercial end-users. The changes ensure that the rule strikes an appropriate balance between the costs of recordkeeping and the benefits to market oversight. This will help ensure that businesses as well as farmers and ranchers that depend on the derivatives markets are able to continue using them effectively and efficiently.
Commercial end-users were not the cause of the crisis, and should not bear the burdens of reforms designed to rein in systemic risk. Since I became Chairman, the CFTC has taken a number of actions to fine-tune our rules to ensure they do not impose unintended burdens on those who use the derivatives markets to hedge commercial risk. Today, I’m pleased to support another final rule that makes important strides towards that goal.
This final rule amends recordkeeping requirements set forth under Commission Regulation 1.35. This regulation requires various types of market participants to keep written and oral records of their commodity interest and related cash or forward transactions. It is very important to our efforts to ensure our markets are strong, transparent, and operate free of fraud and manipulation.
This rule was first implemented in 1948. CFTC made changes to this regulation in 2012, to ensure it accurately reflected evolution of the market and changes in the CFTC’s jurisdiction. But we have been evaluating the rule since then, and we have determined that for some market participants, the costs of complying with certain aspects of the changes may exceed the potential benefits. Throughout this process, we have benefitted from the input of many commercial businesses and other market participants. We appreciate their feedback.
Today’s final rule clarifies that members of exchanges and swap execution facilities not registered with the Commission—typically, end-users—do not have to keep pre-trade communications or text messages. Further, it simplifies the requirements for keeping records of final transactions. The amended rule also states that commodity trading advisors do not have to record oral communications regarding their transactions.
I believe this rule is an important change that will reduce recordkeeping burdens on end-users, and I applaud my fellow commissioners for their unanimous support.
Last Updated: December 18, 2015