CFTC Final Rule: Large Trader Reporting

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Gavel.png FINAL RULE: CFTC Final Rule: Large Trader Reporting Approved at CFTC Open Meeting, July 7, 2011
Timeline, Position Reports for Physical Commodity Swaps
Final Rule Effective Date No-action Relief Deadline
July 22, 2011 September 20, 2011 June 30, 2013

On July 7, 2011, the CFTC held an open meeting to discuss five final rulemakings under the Dodd-Frank Act. Among the rules approved at the meeting was a final rule regarding large trader reporting for physical commodity swaps.<ref>Open Meeting on Five Final Rule Proposals under the Dodd-Frank Act. CFTC. Retrieved on July 7, 2011.</ref>

The commission seeks to accomplish two goals with this rule:

  • Conduct surveillance of large commodity swap positions in the same manner as physical commodity futures; and
  • Give the commission additional data as it considers final rules on position limits.

The rule covers swaps on 46 physical commodities, including crude oil, coal, natural gas, heating oil, gasoline, gold, silver, copper, platinum, palladium, uranium, ethanol, steel, corn, oats, rice, soybeans, soybean meal, soybean oil, wheat, butter, cheese, dry whey, feeder cattle, live cattle, milk, dry milk, lumber, cocoa, coffee, orange juice, sugar, and cotton.

Traders with positions above the reporting threshold will be required to submit position reports daily, in similar fashion to the current system in place for futures and futures-equivalent positions. Once the technology infrastructure is in place, the commission plans to implement an electronic submission system for large trader swap reporting.<ref>[ Final Regulations Regarding Large Trader Reporting for Physical Commodity Swaps]. CFTC. Retrieved on July 8, 2011.</ref>

Effective Date[edit]

The final rules became effective September 20, 2011. However, on September 16, 2011, the CFTC Division of Market Oversight issued a letter providing temporary compliance relief, in order to "provide sufficient time to enable both the industry and the Commission to develop and refine systems and processes that will be able to report these complex transactions. <ref>CFTC’s Division of Market Oversight Provides Temporary Relief from Large Swaps Trader Reporting for Physical Commodities. CFTC. Retrieved on September 23, 2011.</ref> The letter offers relief until November 21, 2011 (cleared swaps) and January 20, 2012 (uncleared swaps), but requires that traders in a reportable position make "a good faith effort to comply" with requirements prior to the relief dates. After the relief dates, compliance will be mandatory.

Temporary Relief, November 18, 2011

On November 18, 2011, the CFTC issued a press release announcing temporary relief for large traders until March 20, 2012. The relief is granted only for market participants who have been making a "good faith effort" to comply with the new rules, and is being provided to give an opportunity to transition to the CFTC's new XML-based large trader reporting system.<ref>CFTC’s Division of Market Oversight Issues Letter to Market Participants Requiring Compliance with New Large Trader Reporting System for Physical Commodity Swaps and Swaptions. CFTC. Retrieved on November 22, 2011.</ref>

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


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