April 30, 2015

CFTC Approves Proposed Rulemaking to Amend the Trade Option Exemption by Reducing Certain Reporting and Recordkeeping Requirements for End-Users

Washington, DC — The U.S. Commodity Futures Trading Commission (Commission) today approved for public comment a proposed rulemaking that would reduce reporting and recordkeeping requirements for trade option counterparties that are neither swap dealers nor major swap participants (Non-SD/MSPs), including commercial end-users that transact in trade options in connection with their businesses. The unanimous vote was conducted via seriatim. The proposed rulemaking will be open for public comment for 30 days after publication in the Federal Register.

With respect to reporting, the Commission proposes to eliminate the Form TO annual notice reporting requirement for otherwise unreported trade options in Commission regulation 32.3(b). Instead, a Non-SD/MSP would only need to provide notice to the Commission’s Division of Market Oversight (DMO) within 30 days after entering into trade options (whether reported or unreported) that have an aggregate notional value in excess of $1 billion in any calendar year or, in the alternative, a Non-SD/MSP would provide notice by email to DMO that it reasonably expects to enter into trade options, whether reported or unreported, having an aggregate notional value in excess of $1 billion during any calendar year. Additionally, the Commission proposes that Non-SD/MSPs would under no circumstances be subject to part 45 reporting requirements in connection with their trade options.

With respect to part 45 recordkeeping for trade options, Non-SD/MSPs would need only to comply with applicable provisions in § 45.2, with the caveat that a Non-SD/MSP would need to obtain a legal entity identifier (LEI) pursuant to § 45.6 and provide such LEI to its SD/MSP counterparty.

Additionally, the Commission is proposing to amend Commission Regulation 32.3(c) to eliminate the reference to the now-vacated part 151 position limits requirements.

Last Updated: April 30, 2015