The US Commodity Futures Trading Commission issued a no-action letter (“CFTC Letter 15-03”) that provides additional time for reporting parties to comply with certain reporting requirements of the ownership and control final rule (“OCR Final Rule”). CFTC Letter 15-03 letter extends certain relief provided under CFTC Letter No. 14-95, a no-action letter issued July 23, 2014 that extended time-limited no-action relief from certain reporting obligations under the OCR Final Rule. The OCR Final Rule requires the electronic submission of trader identification and market participant data reporting forms. CFTC Letter 15-03 provides time-limited no-action relief for reporting parties from the requirement to file the forms electronically and provide certain additional information required by the OCR Final Rule. The relief is extended to dates ranging from September 30, 2015 to February 13, 2017.

View the CFTC Letter 15-03.

The US Securities and Exchange Commission approved the issuance of amendments that would increase corporate disclosure of company hedging policies for directors and employees. The proposed rules, mandated by the Dodd-Frank Act, would require directors, officers and other employees to disclose any hedges or offsetting transactions which would decrease their exposure to equity securities granted by the company as compensation or held, directly or indirectly, by directors or employees.

According to the SEC, the proposed rules, if finalized as proposed, would enhance transparency into corporate governance practices and provides additional information to investors to understand the alignment of employee/directors interests with shareholder interests.

View the proposed rule.

The European Securities and Markets Authority published its Feedback Statement on its consultation on the clearing obligation for non-deliverable forwards. ESMA confirmed that it has decided against moving forward, at this time, with mandatory clearing requirements for NDFs following the concerns raised by industry participants during the consultation which include: (i) the timing of entry into force of the proposed clearing obligation particularly when participants are currently dealing with implementing processes for compliance with the clearing obligation for interest rate swaps and credit default swaps; (ii) that only one EU CCP is authorized to clear NDFs; (iii) the lack of experience globally of NDF clearing; (iv) the importance of international consistency in implementation of the proposed clearing obligation; and (v) the lack of a consistent definition for FX derivatives across the EU. ESMA originally proposed regulatory technical standards for clearing NDFs with an implementation schedule beginning in Q4 2015. ESMA is of the view that more time is needed to properly consider those concerns, but stressed that its current position did not exclude the possibility of it proposing a clearing obligation for NDFs in future.

View ESMAs feedback statement.

The European Commission published a report on the progress made by CCPs in developing technical solutions for the transfer by pension schemes of non-cash collateral as variation margin. Under the European Market Infrastructure Regulation pension schemes that meet certain requirements are exempt from the clearing obligation for a temporary period. The exemption was included in EMIR to provide CCPs with time to develop solutions for the transfer of non-cash collateral by pension schemes to meet variation margin calls. CCPs require highly liquid collateral, mostly cash, as variation margin, but pension schemes are not set up to hold large amounts of cash and would have to amend their business model at high costs to do so. The exemption period may be extended under EMIR to provide CCPs with further time to develop solutions. The Commission’s report assesses the progress made by CCPs to develop solutions and concludes that not enough progress has been made and that imposing the clearing obligation on pension schemes would adversely effect the retirement benefits of future pensioners. The Commission therefore intends to extend the exemption period for a further two years by adopting a Delegated Act.

View the Commission's report.

The European Securities and Markets Authority published an Opinion on the draft of Regulatory Technical Standards on the clearing obligation for itnerest rate swaps under the European Market Infrastructure Regulation. The draft RTS specify details such as the class of OTC derivatives that should be subject to the clearing obligation and the dates from which the clearing obligation takes effect. ESMA’s Opinion follows on from the Commission’s recent communication to ESMA of its intention to endorse the draft RTS with amendments. The amendments proposed by the Commission include postponing the starting date of the frontloading requirement (which is the obligation to clear OTC derivative contracts after a central counterparty has been authorized under EMIR and before the date of application of the clearing obligation), clarifying the calculation of the threshold for investment funds and excluding non-EU intragroup transactions from the clearing obligation. In the Opinion, ESMA addresses the changes made by the Commission to the RTS and, in articular, states that the processes that would exempt non-EU intragroup transactions from the clearing obligation are not appropriate. ESMA states that it can provide technical advice on the issue if requested, so that an alternative solution can be found and delays to the implementation of the clearing obligation can be avoided.

View the Opinion.

The International Organization of Securities Commissions published its final report on risk mitigation standards for non-centrally cleared OTC derivatives, setting out nine standards to help strengthen the non-centrally cleared OTC derivatives market. The standards include risk mitigation techniques relating to trade confirmation, valuation with counterparties, dispute resolution and cross-border transactions, and aim, amongst other issues, to enhance legal certainty over the terms of non-centrally cleared OTC derivatives transactions and shorten the amount of time it may take to resolve disputes.

View the final report.

The US Commodity Futures Trading Commission ("CFTC") issued no-action relief for CFTC Regulations 1.10 and 1.17, respectively. The relief pertains to certain introducing brokers ("IB") regarding net capital and financial reporting requirements. The no-action relief allows foreign-domiciled IBs to file audited and unaudited form 1-FR-IBs, utilizing local accounting principles in effect where the IB is located in lieu of US Generally Accepted Accounting Principles or International Financial Reporting Standards.

View the CFTC Staff Letter.

The European Securities and Markets Authority published the Memorandum of Understanding it entered into with the Hong Kong Securities and Futures Commission on December 19, 2014. The MoU was established further to the European Markets Infrastructure Regulation, under which ESMA is required to set out cooperation arrangements between ESMA and non-EU authorities whose legal and supervisory framework for CCPs are deemed to be equivalent to the European requirements. The MoU provides ESMA with the tools to monitor the ongoing compliance of CCPs with the recognition conditions under EMIR and deals with topics such as requests for information, on-site inspections and confidentiality. The MoU is effective from December 19, 2014.

View the MoU.

The US Securities and Exchange Commission ("SEC") adopted final rules regarding security-based swap data repository ("SDR") registration, duties and core principles in accordance with Title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act ("Dodd-Frank Act"), which authorizes the SEC to regulate security-based swaps and to take steps to encourage accountability and transparency in this market. Adopted under the Securities Exchange Act of 1934, the final rule establishes a registration process for SDRs and requires SDRs to comply with certain duties and core principles regarding maintaining data and when and how a repository’s data could be accessed. It also establishes a requirement for SDRs to have a Chief Compliance Officer and other governance requirements. The SEC’s rules require all swaps to be reported within twenty-four hours until more study is done to refine the timing.

View the press release on the FDIC website.

View the related SEC Open Meeting Agenda.

The European Securities and Markets Authority issued a report on its involvement with the supervisory colleges established under the European Market Infrastructure Regulation for the authorization and supervision of EU-based central counterparties. Supervisory colleges are the channels through which information between home and host authorities is exchanged and through which supervisory activity is coordinated. ESMA is required under EMIR to maintain a coordinating role between national regulators and colleges so as to encourage consistent supervisory practices.

View the report.

Pursuant to a notice published in the Federal Register on January 5, 2015, the US Commodity Futures Trading Commission reopened the comment period, and issued a clarification regarding the reopened comment periods, for two position limit rulemakings. On December 9, 2014, the CFTC Agricultural Advisory Committee convened to discuss, among other things, deliverable supply exemptions for hedging positions. To allow commenters enough time to respond to questions raised at the meeting, the CFTC extended the comment periods for an additional 45 days. The CFTC clarified that, in addition to commenting on agenda issues pertaining to agricultural commodities, comments may also include the issues raised at the meeting or in the associated materials posted to the CFTC’s website. The comment period closes January 22, 2015.

View the CFTC press release.