CFTC Approves Rules and Extends Compliance Date

June 1st | 2020

On May 28, The CFTC unanimously approved a proposed rule that amends regulation 3.10(c)(3), which provides an exemption from registration as a CPO for certain persons located outside the U.S. who are operating offshore commodity pools that are neither offered nor sold to U.S. participants. In particular, the proposal does away with the current rule, which requires a foreign CPO to register all of its funds with the CFTC even if only one fund has U.S. investors. Chairman Heath P. Tarbert lauded the change as aligning the exemption with the “[CFTC’s] longstanding policy goal of regulating only foreign CPOs that offer their funds to U.S. investors.”

The CFTC also unanimously approved an interim final rule to extend the compliance schedule for initial margin requirements for uncleared swaps in response to operational challenges some entities are facing due to the COVID-19 pandemic. The extension defers the compliance date of September 1, 2020 for the initial margin requirements under the CFTC Margin Rule to September 1, 2021. The CFTC’s decision is consistent with the Basel Committee on Banking Supervision and the International Organization of Securities Commissions’ (BCBS/IOSCO) recent revisions to the implementation schedule for margin requirements for non-centrally-cleared derivatives.

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