“CFTC Adoption of Large Trader Reporting and Recordkeeping Rules for Physical Commodity Swaps”
On October 18, 2011, the Commodity Futures Trading Commission (the “CFTC” or the “Commission”) adopted position limits for futures contracts and swaps. Prior to adoption of final position limits, the CFTC had adopted, on July 22, 2011, large trader reporting and recordkeeping rules (the “Final Rules”) for physical commodity futures and option contracts and physical commodity swaps or swaptions that are deemed economically equivalent to certain regulated futures contracts (such swaps or swaptions, “Paired Swaps”). The Final Rules apply to 46 physical commodities (including energy, metal and agricultural commodities) and diversified commodity indices as set forth in a new Part 20 of the CFTC’s regulations and attached as Schedule 1 to this Bulletin. The Final Rules require clearing organizations, clearing members and swap dealers to submit regular reports and maintain records for principal or counterparty accounts that meet or exceed a threshold level of Paired Swaps. The Final Rules also set forth timelines for compliance with the Final Rules, as well as possible eventual phase-out of all or part of the Final Rules.
This Stroock Special Bulletin highlights the major provisions of the Final Rules. Additionally, we summarize and analyze the CFTC’s explanations and clarifications of differences between the Final Rules and the proposed version of the Final Rules (the “Proposed Rules”).