EXTERNAL MEETINGS: EUREX - FBOT TEAM

CFTC staff met with representatives from Eurex to discuss the proposed Foreign Board of Trade (FBOT) registration rules.  Eurex discussed the FBOT registration application process, including timing concerns as well as the scope of the limited application described in the proposed rule.  Eurex also presented issues related to an FBOT’s clearing agency that has a pending application with the Commission to become a derivatives clearing organization (DCO), and asked whether a pending (or complete) DCO application would exempt an FBOT from the proposed requirement that its clearing organization comply with the IOSCO clearing principles.  Also related to clearing, Eurex asked how the Commission would incorporate evolving international standards (for example, the RCCPs are currently under review by IOSCO) into FBOT registration and an FBOT’s ongoing compliance with the conditions identified in the proposed rules.  ~ ~Eurex presented questions related to permitting swaps on an FBOT, specifically asking whether two separate applications would be required for an FBOT to trade both futures (and options on futures) and swaps.  Commission staff noted that the NPRM only envisions that a single FBOT application be filed for an FBOT seeking to trade both futures and swaps.  ~ ~Eurex also asked questions regarding the proposed definition of an FBOT eligible to be registered, which requires that an FBOT be subject to continued oversight by a regulator that has power to intervene in the market.  Eurex noted that its regulator’s intervention authority is primarily to address disorderly trading and is generally less broad than the emergency authority that the CFTC may use to intervene in its markets.  CFTC staff noted that the proposed registration process would assess the comparability of the FBOT’s regulatory oversight to the CFTC’s domestic regime for contract markets.  ~ ~Finally, Eurex asked if the Commission would be permitting draft applications and how the timing requirements would relate to the submission of a draft application.  Staff noted that the NPRM would permit and encourage draft applications, but that the specific timing implications were not yet finalized.