Cross-border clarity, US position limits and MMF repo trades

The week on, August 25–31, 2017

CFTC pushed on cross-border clarity

US position limits to take a year

MMF repo trades cleared


COMMENTARY: Keeping to time

This week, a note of urgency was heard in market calls for overhaul and implementation of key pieces of US regulation to be kept on schedule – in order to best complement corresponding rules due to be implemented around the world.

Commodity Futures Trading Commission (CFTC) chairman Christopher Giancarlo should urgently overhaul cross-border aspects of US regulation, according to market players.

The industry thinks he must first focus on achieving equivalence for swap execution facilities (Sefs) with trading venues in Europe.

The need for reform is given added impetus because new European trading rules are due to take effect in January 2018. The European Union’s second Markets in Financial Instruments Directive will introduce regulation for trading venues in Europe from January 3 that is similar to the Sef rules in the US.

“Previously, only the CFTC had its full rule sets up and running, but now all the other global regulators are getting to that point. This presents an opportunity for the US regulators to review the current substituted compliance regime here in the US and recalibrate it,” says Stephen Humenik, a lawyer and former adviser at the CFTC.

Another priority for the CFTC should be finalising position limits for commodity exposures. Industry participants criticise what they say is inaction on a final rule that has now been re-proposed for the fourth time.

At the CFTC, two newly confirmed commissioners have pledged to take action, but even then the actual rule – first proposed by the CFTC in 2010 – is expected to take at least a year to complete. Thankfully, while position limits rules have been a contentious issue, the political will to complete the rule-making is present, say lawyers who think it will not become a partisan issue.

The European Securities and Markets Authority already published the first batch of position limits on August 10, in a sign other limits will be announced as and when it approves them, rather than in one go once all limits are finalised.


Nearly 80% of natural gas trades are priced off indexes, but only 43.4% of eligible daily fixed-price natural gas volumes were reported to index providers in 2016, according to a Platts analysis of data from the Federal Energy Regulatory Commission.


“We are pleased that the correct decision, the law, has won the day. What was at stake in this case was the country’s interests. Although a billion dollars is a very large, crazy sum, neither of our companies would have gone bankrupt, but the further development of the Russian market was at risk” – Bella Zlatkis, deputy chairman of Sberbank’s executive board, on a decision by an appeals court in Moscow to overturn a first-instance verdict favouring Russia’s largest oil-pipeline company Transneft in a billion-dollar derivatives dispute.

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