Disscussion of extraterritoriality with respect to data reporting.

NRUCFC’s primary comment is that it should not be treated as a “financial entity” for purposes of the end-user exception from clearing in new section 2(h)(7) of the Commodity Exchange Act (CEA).  NRUCFC explained that it provides financing only to its members, which are eligible electric cooperatives or non-profit electricity providers regulated under the Rural Electrification Act.  NRUCFC provides financing that would otherwise not be available to small electric cooperatives because of their limited size.  NRUCFC issues debt securities in the public markets and is subj

NFPEEU believes its members are in a special situation because they are all non-profit entities and any increased costs they bear must be passed directly to ratepayers (i.e.., they do not have shareholders to absorb losses).  Also, in terms of their use of swaps, they are required to enter into a variety of different types of customized swaps to reduce the risks of energy commodity price fluctuations because they are mandated to provide continuous electric service to their customers and must deal with a variety of variable conditions, such as changing weather patterns and different sized

ONEOK explianed how it uses swaps, and in particular the roles played by the various companies within the corporate group.  The discussion focused on how swaps between affiliated companies would be treated in determining if any of the companies is a swap dealer.  ONEOK explained the efficiency benefits of centralizing swap activities in one of its controlled companies.

On February 2, 2011, Commission staff met with the Air Transport Association (“ATA”) to discuss the real-time reporting proposed rulemaking.  Specifically, the ATA is concerned that there will not be long enough time delays for trading in illiquid markets or in the less liquid segments of the forward curve.  They suggested that the definition of large notional swaps (and block trades) should reflect both size and tenor, and that the time delay should reflect liquidity or lack thereof.   They suggested that the 5% threshold in the distribution test should be increase

Participants discussed the derivatives clearing organization core principles rulemaking for participant and product eligibility (Core Principle C) and treatment of funds (Core Principle F).

This group of foreign banks submitted a comment letter to the CFTC three days before this meeting, in which they explained how they would like the CFTC to apply Dodd-Frank Act’s Title VII regulations to them.  This meeting largely followed the structure of that letter, which can be found in the comment files of the Definitions and Registration rulemakings for swap dealers and major swap participants.


 

Counsel represents U.S. banks that own foreign entities engaging in swap activities primarily outside of the U.S.  Known as “Edge Act Corporations,” these subsidiaries of U.S. banks are chartered by the Federal Reserve, typically own foreign banks or have branches in foreign countries, and are heavily regulated by the Federal Reserve, as well as the home country regulator wherever the foreign bank is located.  Edge Act Corporations engage in swap activity almost exclusively outside of the U.S., but counsel described several instances where a small amount of U.S.

On January 24, 2011, CFTC staff participated in a meeting with Barclays to discuss issues and questions related to the Real-time Public Reporting rulemaking.  The discussion covered the following areas:
 
Liquidity and Block Trades

Better Markets expressed to the staff that the Derivatives Clearing Organization (“DCO”) process of determining which swaps will be offered for clearing is critical to the clearing mandate in the Dodd-Frank Act.  Better Markets also commented on the importance of transparency in the review process of swaps for mandatory clearing.  Better Markets suggested that the DCO should be required to seek public comment when the DCO is considering whether to clear a particular type of swap, and if the DCO determines not to clear that type of swap, it should make available the same informa