Yesterday the Commodity Futures Trading Commission (CFTC) convened an open meeting to clarify provisions of the agency’s recent derivatives rules. During the meeting, participants proposed minor tweaks to the rules to alleviate the regulatory burden for smaller users in the derivatives market.
Specifically, the meeting discussed when residual interest should be posted by futures merchants, recordkeeping requirements for commodity interest, and the interpretation of when agreements with volumetric optionality fall outside of the swap exception. With respect to recordkeeping requirements, the CFTC clarified exceptions as well as the need for a searchable data format. The amendment offered on residual interest proposes removing the December 31, 2018 termination date for the phased-in compliance schedule. Most substantially, the proposed changes attempt to minimize or eliminate certain regulatory requirements for smaller participants including certain farming and energy firms.
The CFTC has published the proposed amendments and will open a public comment period shortly, before finalizing the new provisions. The CFTC’s amendments suggest that the agency is mindful of the regulatory burden placed on certain market participants that have not contributed to market manipulation and distress in recent years.