/Vol. 77, No. 213/Friday, November 2, 2012/Rules and Regulations
See Dodd-Frank Wall Street Reform andConsumer Protection Act, Public Law 111–203, 124Stat. 1376 (2010). The text of the Dodd-Frank Actis available at
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
Adaptation of Regulations to Incorporate Swaps,76 FR 33066 (June 7, 2011) (‘‘Proposing Release’’).
Comment letters are available in the commentfile on
All Commission regulations are in Chapter I of Title 17 of the CFR.
COMMODITY FUTURES TRADINGCOMMISSION17 CFR Parts 1, 4, 5, 7, 8, 15, 16, 18,21, 22, 36, 38, 41, 140, 145, 155, and166
RIN Number 3038–AD53
Adaptation of Regulations ToIncorporate Swaps
Commodity Futures TradingCommission.
The Dodd-Frank Wall StreetReform and Consumer Protection Act(‘‘Dodd-Frank Act’’ or ‘‘DFA’’)established a comprehensive newstatutory framework for swaps andsecurity-based swaps. The Dodd-FrankAct repeals some sections of theCommodity Exchange Act (‘‘CEA’’ or‘‘Act’’), amends others, and adds anumber of new provisions. The DFAalso requires the Commodity FuturesTrading Commission (‘‘CFTC’’ or‘‘Commission’’) to promulgate a numberof rules to implement the newframework. The Commission hasproposed and finalized numerous rulesto satisfy its obligations under the DFA.This rulemaking makes a number of conforming amendments to integrate theCFTC’s regulations more fully with thenew framework created by the Dodd-Frank Act.
Effective January 2, 2013.
FOR FURTHER INFORMATION CONTACT
Peter A. Kals, Special Counsel, 202–418–5466,
Division of Clearing and Risk; Elizabeth Miller,Attorney-Advisor, 202–418–5450,
Division of SwapDealer and Intermediary Oversight;David E. Aron, Counsel, 202–418–6621,
Office of GeneralCounsel; Alexis Hall-Bugg, Attorney-Advisor, 202–418–6711,
Division of MarketOversight; Katherine Driscoll, SeniorTrial Attorney, 202–418–5544,
Division of Enforcement, Commodity FuturesTrading Commission, Three LafayetteCentre, 1151 21st Street NW.,Washington, DC 20581.
Table of Contents
I. BackgroundII. Amended RegulationsA. Part 11. Regulation 1.3: Definitionsa. General Changes b. Various Amended and New Definitions(Regulation 1.3)c. Regulation 1.3(t): Open Contractd. Regulation 1.3(ll): Physicale. Regulation 1.3(ss): Foreign Board of Tradef. Regulation 1.3(yy): Commodity Interestg. Regulation 1.3(z): Bona Fide HedgingTransactions and Positionsh. Lack of a Definition of ‘‘End-User’’ inRegulation 1.32. Regulation 1.4: Use of ElectronicSignatures3. Regulation 1.31: Books and Records;Keeping and Inspection4. Regulations 1.33: Monthly andConfirmation Statements5. Regulation 1.35: Records of CashCommodity, Futures and OptionTransactions6. Regulation 1.37: Customer’s or OptionCustomer’s Name, Address, andOccupation Recorded; Record of Guarantor or Controller of Account7. Regulation 1.39: Simultaneous Buyingand Selling Orders of DifferentPrincipals; Execution of, for andBetween Principals8. Regulation 1.40: Crop, MarketInformation Letters, Reports; CopiesRequired9. Regulation 1.59: Activities of Self-Regulatory Employees, Governing BoardMembers, Committee Members andConsultants10. Regulation 1.63: Service on Self-Regulatory Organization GoverningBoards or Committees by Persons WithDisciplinary Histories11. Regulation 1.67: Notification of FinalDisciplinary Action Involving FinancialHarm to a Customer12. Regulation 1.68: Customer Election NotTo Have Funds, Carried by a FuturesCommission Merchant for Trading on aRegistered Derivatives Trading ExecutionFacility, Separately Accounted for andSegregated13. Regulations 1.44, 1.53, and 1.62—Deletion of Regulations Inapplicable toDesignated Contract Markets14. Technical Changes to Part 1 in Orderto Accommodate Recently Finalized Part22 and Corresponding Changes to Part 22B. Part 7C. Part 8D. Parts 15, 18, 21, and 36E. Parts 41, 140 and 145F. Parts 155 and 156G. Other General Changes to CFTCRegulations1. Removal of References to DTEFs2. Other Conforming ChangesIII. Administrative ComplianceA. Paperwork Reduction ActB. Regulatory Flexibility ActC. Consideration of Costs and Benefits
On July 21, 2010, President Obamasigned the Dodd-Frank Act into law.
Title VII of the Dodd-Frank Act
(‘‘TitleVII’’) amended the CEA
to establish acomprehensive new regulatoryframework for swaps and security-basedswaps. The legislation was enacted,among other reasons, to reduce risk,increase transparency, and promotemarket integrity within the financialsystem by, among other things: (1)Providing for the registration andcomprehensive regulation of swapdealers (‘‘SDs’’), security-based swapdealers, major swap participants(‘‘MSPs’’), and major security-basedswap participants; (2) imposing clearingand trade execution requirements onswaps and security-based swaps, subjectto certain exceptions; (3) creatingrigorous recordkeeping and real-timereporting regimes; and (4) enhancing therulemaking and enforcement authoritiesof the Commissions with respect to,among others, all registered entities andintermediaries subject to theCommission’s oversight.To apply its regulatory regime to theswap activity of intermediaries, theCommission must make a number of changes to its regulations to conformthem to the Dodd-Frank Act. On June 7,2011, the Commission published in the
a proposal to makesuch changes (‘‘the Proposal’’).
Therewas a 60-day period for the public tocomment on the Proposal, which endedon August 8, 2011. The Commissionreceived 39 comment letters from avariety of institutions, includingdesignated contract markets (‘‘DCMs’’),agricultural trade associations, andagricultural cooperatives.
TheCommission has determined to adoptthe proposed rules primarily in the formproposed with certain modifications,discussed below, to address thecomments the Commission received.With respect to certain of the proposedchanges to regulation 1.35
(regardingrecording of oral communications andthe scope of written communications)and related amendments to regulation1.31, the Commission has determined toaddress those changes in a final rule ina separate release.The Commission is mindful of, andcontinues to consider, the commentsreceived on the Proposal’s amendmentsto regulation 1.35 (records of commodity interest and cashcommodity transactions). Thosecomments were submitted by variousgroups, including DCMs, representativesof the FCM and IB communities, energy
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