In an open meeting, the CFTC approved three final rules: (i) one concerning position limits for derivatives, (ii) one extending the Phase VI compliance date of the margin requirements for uncleared swaps for swap dealers and (iii) one exempting certain foreign intermediaries from the requirement to register as CPOs.
- Position Limits for Derivatives. In a 3-2 vote (with CFTC Commissioners Rostin Benham and Dan Berkovitz in dissent), the CFTC adopted, with amendments, its previously proposed rule to apply federal speculative limits to 25 "core referenced futures contracts," including futures and options linked to those contracts and economically equivalent swaps (see previous coverage). Additionally, the final rule (i) revised the definition of "bona fide hedging transaction or position" to incorporate a larger list of enumerated bona fide hedges and (ii) adopted a new definition of "economically equivalent swaps." The final rule also (i) amends the regulations governing exchange-set position limit levels, (ii) creates a new process to streamline non-enumerated bona fide hedging recognitions, as they concern federal position limits, and (iii) eliminates Form 204 (and relevant corresponding parts of Form 304). The final rule will become effective 60 days after publication in the Federal Register.
- Margin Requirements for Uncleared Swaps for Swap Dealers and Major Swap Participants (Phase VI Compliance Date Extension). In a unanimous vote, the CFTC adopted its previously proposed rule to extend, for non-prudentially regulated swap dealers and major swap participants with "smaller uncleared swap portfolios," the initial margin implementation schedule from September 1, 2021 to September 1, 2022 (see previous coverage). The CFTC explained that the purpose of the extension is to aid such entities in avoiding market disruption resulting from the large number of entities required to comply by September 1, 2021. The final rule will become effective 30 days after its publication in the Federal Register.
- Exemption from Registration for Certain Foreign Intermediaries. In a unanimous vote, the CFTC adopted its previously proposed amendment to CFTC Regulation 3.10(c) ("Registration of Futures Commission Merchants, Retail Foreign Exchange Dealers, Introducing Brokers, Commodity Trading Advisors, Commodity Pool Operators, Swap Dealers, Major Swap Participants and Leverage Transaction Merchants") to allow a person or entity that is (i) engaging in CPO activity on behalf of offshore commodity pools and (ii) legally domiciled outside of the United States to claim an exemption from CPO registration on a pool-by-pool basis (see previous coverage). Additionally, the final rule (i) creates a conditional safe harbor for non-U.S. CPOs who cannot, due to the structure of their offshore pools, determine with certainty that such pools contain no U.S. investors and (ii) allows the U.S. affiliates of a non-U.S. CPO to make initial capital contributions to such non-U.S. CPO's offshore pools without impacting the eligibility of the non-U.S. CPO using the exemption regarding such offshore pools. The final rule will become effective 60 days after its publication in the Federal Register.
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