CFTC Staff Letters

The Commodity Futures Trading Commission’s Market Participants Division and Division of Market Oversight issued interpretative guidance confirming the application of certain cross-border definitions to SBC Limited.

Staff Interpretation allows Japanese nonbank swap dealers subject to the Japanese Comparability Order to file with the CFTC and the NFA certain enumerated schedules (the ""In Scope Schedules"") of the Annual Report to comply with condition 9 of the order. Japanese nonbank swap dealers may, but are not required to, submit the Annual Report in its entirety to comply with condition 9.

Staff Interpretation to Swap Dealers electing the Tangible Net Worth method of calculation capital under regulation 23.101.

The Divisions do not interpret Sections (2)(h)(1) and 2(h)(8) of the CEA as subjecting to the clearing and trade execution requirements certain swaps transactions entered into by a DCO to reduce and manage the risk associated with a clearing member default.

The guidance clarifies the CIP and BO requirements applicable to introducing brokers (IBs) under the Bank Secrecy Act (BSA). The guidance provides regulatory clarity to certain IBs who lack access to the information needed to comply with CIP and BO obligations. The guidance eliminates duplicative efforts without impacting money laundering or terrorist financing risk, as the customer due diligence obligations will continue to be performed by the futures commission merchant (FCM) that carries the customer account. The particular IBs subject to this guidance do not introduce their customers’ accounts to FCMs. The IBs do not receive or have access to the customer identification and financial information obtained by FCMs, or the monthly account information issued by FCMs. This guidance clarifies that these IBs are not required to carry out CIP and comply with BO requirements.

The staff letter confirms that, for purposes of applying the position limits set forth in CFTC Regulation 150.2, when an institutional investor qualifies for the Regulation 150.4(b)(1) exemption from position aggregation with respect to their investment in a fund, the institutional investor is not required to look through its investment in a fund to aggregate commodity interest positions of an underlying portfolio company in which the institutional investor may hold a 10 percent or greater indirect interest (via its investment in the fund).  

Interpretative relief from the definition of “commodity pool” for certain real estate holding companies.

A futures commission merchant (FCM), swap dealer (SD), or introducing broker (IB) that receives separate compensation for commodity trading advice is not required to register as a commodity trading advisor, provided that the offered advice is “solely incidental” to the conduct of the FCM’s or SD’s business, or “solely in connection with” the operation of the IB’s business.