CFTC Final Rule: Anti-Manipulation and Anti-Fraud

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Gavel.png FINAL RULE: CFTC Final Rule: Anti-Manipulation and Anti-Fraud Approved at CFTC Open Meeting, July 7, 2011
Dodd-Frank Timeline, Proposed Rule Regarding Prohibition of Market Manipulation
Proposal Date Final Rule Effective Date
November 3, 2010 July 14, 2011 August 15, 2011

At its July 7, 2011 open meeting, the CFTC approved its final rules regarding market manipulation and fraud. The changes can be found in the following two rules:

  • Final Rule 180.1, which "broadly prohibits manipulative and deceptive devices and contrivances, employed intentionally or recklessly, regardless of whether the conduct in question was intended to create or did create an artificial price." This rule employs a scienter requirement, in order "to ensure that good-faith mistakes or negligence will not constitute a violation of the final Rules."
  • Final Rule 180.2, which "codifies the Commission’s long-standing authority to prohibit price manipulation by making it unlawful for any person, directly or indirectly, to manipulate or attempt to manipulate the price of any swap, or of any commodity in interstate commerce, or for future delivery on or subject to the rules of a registered entity." Rule 180.2 mirrors the text of new CEA section 6(c)(3), and will be guided by a "four-part test for manipulation":
  1. that the accused had the ability to influence market prices;
  2. that the accused specifically intended to create or effect a price or price trend that does not reflect legitimate forces of supply and demand;
  3. that artificial prices existed; and
  4. that the accused caused the artificial prices. Recklessness will not suffice under final Rule 180.2 as it will under final Rule 180.1.[1]

Related Documents: Fact Sheet, Q&A, and Federal Register Entry

Background on CFTC Proposed Rule

On October 26, 2010, the CFTC held its third in the series of open meetings to consider the issuance of proposed rulemakings under the Dodd-Frank Act. One of the agenda items was a proposed rule regarding the prohibition of market manipulation.[2]

The proposal appeared in the Federal Register on November 2, 2010.

Read comment letters.png
Read proposed rule.png

References

  1. Anti-Manipulation and Anti-Fraud Final Rules. CFTC. Retrieved on July 7, 2011.
  2. Open Meeting on Third Series of Proposed Rules under the Dodd-Frank Act. CFTC. Retrieved on March 3, 2011.

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