August 17, 2012

CFTC Approves Conforming Rule on Registration of Intermediaries

Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) today approved a final rule to conform the CFTC’s existing intermediary registration rules to changes made to the Commodity Exchange Act (CEA) by the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act). The final rule also is intended to create uniformity in treatment of previously regulated and newly regulated commodity interest transactions (e.g., swaps and futures) by registered intermediaries, such as futures commission merchants (FCM) and other registrants.

The final rule ensures that the intermediary registration process applies to new categories of registrants, such as swap dealers and major swap participants that were added by the Dodd-Frank Act. The final rule also expands an existing exemption from being registered as a FCM to foreign brokers and other foreign intermediaries that execute a swap transaction either bilaterally or on subject to the rules of a designated contract market or on subject a swap execution facility on behalf of non-U.S. persons. The rule was passed via seriatim by a vote of 4 to 1. The rule is effective 60 days after it is published in the Federal Register.

In addition to various technical, conforming, and modernization amendments, this final rule adds references to new terms, including swap execution facility, swap dealer, and major swap participant, where appropriate. For example, in anticipation of the registration of floor traders on a swap execution facility, the final rule adds references to a swap execution facility into provisions regarding temporary licensing and registration of floor traders. The rule also removes all references to a derivatives transaction execution facility, a regulatory category that was removed by the Dodd-Frank Act.

Finally, the rule includes technical changes that will permit legal entities (in addition to natural persons) to now register as floor traders – a change required to implement the exception from swap dealer consideration for cleared swaps entered into by floor traders on a swap execution facility.

Last Updated: August 17, 2012