Statement of CFTC Chairman J. Christopher Giancarlo on CFTC approval of NASDAQ Oslo ASA and Osaka Exchange as FBOTs

Statement of CFTC Chairman J. Christopher Giancarlo on CFTC approval of NASDAQ Oslo ASA and Osaka Exchange as FBOTs

August 22, 2018

I am pleased that we have moved forward with the Foreign Board of Trade (FBOT) applications of the NASDAQ Oslo ASA and Osaka Exchange. Granting FBOT applications demonstrates our commitment to deferring to the regulation and supervision of comparable governmental authorities. 

These applications were first submitted six years ago. As I said in my speech at Boca in March 2017, the Commission would be getting back to regular order, which also means emptying the backlog of open matters as we have done here.

 

CFTC Unanimously Adopts Rule Amendments Simplifying Chief Compliance Officer Duties and Annual Report Rules for FCMs, Swap Dealers and Major Swap Participants

Statement of CFTC Chairman J. Christopher Giancarlo Regarding the Final Rule on Chief Compliance Officer Duties and Annual Report Requirements for Futures Commission Merchants, Swap Dealers, and Major Swap Participants

August 21, 2018

As part of the CFTC’s Project Kiss efforts, this final rule will streamline and clarify a Chief Compliance Officer’s (CCO) obligations, as well as harmonize certain provisions with the Securities and Exchange Commission’s (SEC) rules.  Clarifying the role and responsibilities of the CCO should enable greater accountability and improve overall compliance, as well as reduce burdens on CCOs and uncertainty for registrants.   The rule continues to impose a duty on CCOs to resolve matters but within the practical limits of their position at the CFTC-registered entity.  The rule also continues to impose a duty for the CCO to undertake an annual review but reduces the burdens associated with the review, which will allow the CCO to devote more time and resources to compliance activities at the registrant.  In addition, further harmonizing definitions and CCO duties of dual CFTC-SEC registrants should improve efficiency and further reduce the burdens on CCOs.  

I would like to thank CFTC staff for their efforts.  I would also like to thank Commissioners Quintenz and Behnam for their support. 

 

Statement of CFTC Commissioner Brian D. Quintenz Regarding the Virtual Commodity Association

Statement of CFTC Commissioner Brian D. Quintenz Regarding the Virtual Commodity Association

August 20, 2018

Given the absence of federal oversight jurisdiction in the crypto market, in February and again in March of this year I called on the crypto platform community to come together and develop a self-regulatory organization-like entity that could develop and enforce rules.[1]  I am pleased that progress has been made on such a concept.  Ultimately, an independent and empowered SRO-like entity could have a meaningful impact on the integrity and credibility of this young marketplace.  Today’s announcement is a positive step towards that realization.

 

[1] See Remarks of Commissioner Brian Quintenz before the Yahoo Finance All Markets Summit: Crypto (Feb. 7, 2018), https://finance.yahoo.com/video/cfct-dont-ever-want-no-185517150.html; Keynote Address of Commissioner Brian Quintenz before the DC Blockchain Summit (March 7, 2018), https://www.cftc.gov/PressRoom/SpeechesTestimony/opaquintenz8. 

 

When the Leverage Ratio Meets Derivatives: Running Out Of Options?

  • Market participants argue that the recent leverage ratio has become the binding constraint for certain, often low-risk derivatives businesses, such as client clearing.
  • We examine the potential effect of the Basel III leverage ratio on cleared equity futures options, products where the leverage ratio demands particularly high capital relative to risk.
  • We find that the clearing of equity options has shifted from firms subject to higher leverage requirements (e.g., US GSIB banks) to those subject to a lower requirement (e.g., banking affiliate of EU firms and non-ban

Cleared and Uncleared Margin Comparison for Interest Rate Swaps

  • The paper compares cleared margin to hypothetical uncleared margin generated by ISDA SIMM on interest rate swap portfolios currently cleared at two DCOs. First the market risk measure is examined, and then the overall initial margin figure with add-on charges included.
  • The ten-day value-at-risk as calculated by SIMM is not necessarily higher than the five-day DCO measure.

External Meetings: In Person Meeting

External Meetings: In Person Meeting

On July 13, 2018, Commissioner Quintenz and his staff had an in-person meeting with representatives from Delta Strategy Group, DRW, Jump Trading, and Optiver US LLC. The meeting lasted approximately 1 hour and focused on the proposed rules set forth in the notice of proposed rulemaking for the de minimis exception to the swap dealer definition, including the discussion regarding swaps that are cleared and/or exchange-traded.

Exploring price impact liquidity for December 2016 NYMEX energy contracts

  • Examines the liquidity of the December 2016 NYMEX contracts for crude oil, natural gas, diesel, and gasoline.

  • Finds that there is excellent liquidity near expiration as well as good liquidity when there are multiple years until expiration that is improved by the trading of calendar spreads.

  • Recommends a new liquidity assessment tool that may be used to calculate initial margin for large positions or by traders wanting to establish or remove a large position.

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