/Vol. 77, No. 172/Wednesday, September 5, 2012/Rules and Regulations
Dodd-Frank Wall Street Reform andConsumer Protection Act, Public Law 111–203, 124Stat. 1376 (2010). The text of the Dodd-Frank Actmay be accessed through the Commission’s Website,
Pursuant to Section 701 of the Dodd-Frank Act,Title VII may be cited as the ‘‘Wall StreetTransparency and Accountability Act of 2010.’’
7 U.S.C. 1
(2006). The Commission’sregulations are found at 17 CFR part 1
(2012). Both the CEA and the Commission’sregulations also may be accessed through theCommission’s Web site.
Section 721(a) of the Dodd-Frank Act,which re-organized (and in some cases amended)existing definitions in, and added new definitionsto, Section 1a of the CEA. The CPO and CTAdefinitions, as amended, are codified at CEAsections 1a(11) and 1a(12), respectively.
76 FR 11701.
76 FR 11701. Part 4 applies to CPOs withrespect to their activities affecting pool participantsand to CTAs with respect to their activities affectingclients. Depending on the nature of its activities, aCPO or CTA may also come within the definitionof the term ‘‘swap dealer’’ or ‘‘major swapparticipant’’ in new CEA Section 1a(49) or 1a(33),respectively. As directed by the Dodd-Frank Act,the Commission has adopted new regulations thatestablish business conduct standards for SDs andMSPs.
77 FR 9734 (Feb. 17, 2012). These newregulations apply to SDs and MSPs with respect tothe counterparties with whom they transact swap business, and govern different activity than that towhich the Part 4 regulations apply.
These comment letters currently are available onthe Commission’s Web site.
Comment letter from Chris Barnard (Mar. 29,2011).
Comment letter from Kyle Vandergrift (Apr. 20,2011).
76 FR 33066, 33069–70 (June 7, 2011).
COMMODITY FUTURES TRADINGCOMMISSION17 CFR Part 4
Amendments to Commodity PoolOperator and Commodity TradingAdvisor Regulations Resulting Fromthe Dodd-Frank Act
Commodity Futures TradingCommission.
The Commodity FuturesTrading Commission (Commission) isamending its regulations governing theoperations and activities of commoditypool operators (CPOs) and commoditytrading advisors (CTAs) in order to havethose regulations reflect changes madeto the Commodity Exchange Act (CEA) by the Dodd-Frank Wall Street Reformand Consumer Protection Act (Dodd-Frank Act).
FOR FURTHER INFORMATION CONTACT
Barbara S. Gold, Associate Director, orChristopher W. Cummings, SpecialCounsel, Division of Swap Dealer andIntermediary Oversight, 1155 21st StreetNW., Washington, DC 20581. Telephonenumber: 202–418–6700 and electronicmail:
A. The Dodd-Frank Act
On July 21, 2010, President Obamasigned the Dodd-Frank Act.
Title VII of the Dodd-Frank Act
to establish a comprehensive newregulatory framework for swaps andsecurity-based swaps. The goal of thislegislation was to reduce risk, increasetransparency, and promote marketintegrity within the financial system by,among other things: (1) Providing for theregistration and comprehensiveregulation of swap dealers (SDs) andmajor swap participants (MSPs); (2)imposing clearing and trade executionrequirements on standardized derivativeproducts; (3) creating robustrecordkeeping and real-time reportingregimes; and (4) enhancing theCommission’s rulemaking andenforcement authorities with respect to,among others, all registered entities andintermediaries subject to the oversightof the Commission. Among the changesmade by the Dodd-Frank Act to the CEAwere to include within the CPOdefinition the operator of a collectiveinvestment vehicle that trades swaps,and to include within the CTAdefinition a person who provides adviceconcerning swaps.
B. The Proposed Amendments to Part 4
Part 4 of the Commission’s regulationssets forth a comprehensive regulatoryframework for the operations andactivities of CPOs and CTAs. It includesdisclosure, reporting and recordkeepingrequirements for registered CPOs andCTAs, registration and complianceexemptions for CPOs and CTAs, andother provisions, including anti-fraudprovisions, applicable to CPOs andCTAs, regardless of registration status.To ensure that the Part 4 regulationsapplied to CPOs and CTAs in thecontext of these intermediaries’involvement with swap transactions, onMarch 3, 2011, the Commissionproposed certain amendments to Part 4(Proposal).
As the Commission explained in theProposal, because many of the existingPart 4 regulations generally applied toCPOs and CTAs, they would continue to be applicable to CPOs and CTAs withrespect to their swap activities withoutthe need for amendment thereto. TheCommission noted that in otherinstances, however, the text of certainexisting Part 4 regulations was specificto activities involving futures contracts,commodity options, and off-exchangeretail foreign currency (‘‘commodityinterests’’), and it did not include, referto or otherwise take account of swapactivities. As the Commission stated:‘‘The Proposal [was] intended to clarifyand ensure that the requirementsgoverning the operations and activitiesof CPOs and CTAs continue to apply forthese intermediaries in the context of their involvement with swaptransactions.’’
Accordingly, theCommission proposed to amendRegulations 4.7, 4.10, 4.22, 4.23, 4.244.30, 4.33 and 4.34 to include in eachof these regulations a reference to swapsor swap activities.
II. Comments on the Proposal
The Commission received twocomment letters on the Proposal,
eachof which supported the Proposal. One of these letters stated that the Proposal‘‘should act to reduce risk and increaseits transparency, and promote marketintegrity by ensuring that all entities areconsistently regulated to the extent thattheir trading and other activities pertainto swaps.’’
The other letter urged theCommission ‘‘to work quickly anddiligently on writing these rules andputting them in place as soon aspossible.’’
III. The Final Regulations
In light of the supportive comments itreceived, with one exception theCommission is adopting theamendments to the Part 4 regulations itproposed. That exception concerns theproposed amendment to Regulation4.10(a) that,
for the purposes of Part 4,
would have expanded the definition of the term ‘‘commodity interest’’ toinclude ‘‘swaps.’’ This proposal wassuperseded by a proposed amendmentto Regulation 1.3(yy) that,
for the purposes of all of the Commission’sregulations,
would define the term‘‘commodity interest’’ to include‘‘swaps.’’
Accordingly, theCommission is considering theproposed definition of the term‘‘commodity interest’’ in connectionwith its consideration of the commentletters it received on its proposedamendment to Regulation 1.3(yy).
A. Adding ‘‘Swap’’ Terms to Part 4
As proposed, the Commission isinserting ‘‘swap,’’ ‘‘swap transaction’’ ora similar term at various regulationsthroughout Part 4.
the amendmentsto Regulations 4.23(a)(1), 4.24(g), (h)(1),and (i)(2) for CPOs and Regulations4.34(g) and 4.34(i)(2) for CTAs. For
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