CFTC Again Extends Deadlines for New OCR Compliance; Puts Pressure on FCM Clients Who Will Not Provide Adequate Information Regarding Trading Control

Late last week, staff of the Division of Market Oversight of the Commodity Futures Trading Commission again delayed the roll-out of certain new large trader reporting requirements that initially were adopted during November 2013 and, most recently, scheduled to go into effect later this month. Under these new Ownership and Control Data Reporting Requirements, the CFTC expanded upon its previous large trader reporting regime and required the electronic submission of certain large traders’ and position holders’ data regarding their futures and swaps holdings on updated forms:

  • new Form 102A to identify holders of large positions;
  • new Form 102B to identify traders that exceed a stated volume of transactions (50 contracts/day on a notional value basis; “volume threshold accounts”) during a single trading day (regardless of end-of-day positions);
  • new Form 102S to identify holders of certain swaps positions;
  • new Form 40/40S to collect information from reporting traders; and
  • new Form 71 to collect information on omnibus volume threshold accounts.

Under the revised schedule, new requirements related to the electronic reporting of:

  • Forms 102A, 102B (for Designated Contract Market volume trading threshold accounts) and 102S go into effect on September 29, 2016;
  • Forms 40, 40S and new Form 71 go into effect on November 18, 2016; and
  • Form 102B (for Swap Execution Facility volume threshold trading accounts) goes into effect on August 30, 2018.

In the interim period, recordkeeping requirements that became effective on August 14, 2014, and legacy non-automated reporting and certain other requirements remain in effect. Entities required to file the relevant forms (Reporting Parties) are also expected to cooperate with CFTC staff to test and implement relevant information technology standards and systems.

As part of its no-action relief and OCR guidance, DMO staff also agreed to extend the time period by which certain other specific OCR requirements would apply. For example, Reporting Parties obligated to file new Form 102A beginning September 29, 2016, will not be required to include certain information regarding trading account controllers (e.g., phone number, name of employer, employer National Futures Association identification, employer legal entity identifier) until August 30, 2018. Staff also increased the reporting trigger for volume threshold accounts under new Form 102B to 250 or more contracts per day from September 29, 2016, until September 28, 2017, and to 100 contracts per day from September 29, 2017, to August 29, 2018. The threshold level would revert to 50 contracts per day beginning August 30, 2018.

DMO staff also clarified who would be considered owners and controllers of reportable accounts under its OCR rules, as well as provided a mechanism for Reporting Parties to identify to the CFTC a client that does not provide it with adequate information to identify a trading account controller on a Form 102A or 102B. From September 29, 2016, to September 28, 2017, DMO staff will not recommend an enforcement action be taken against any Reporting Party that does not properly report a trading account controller provided it specially discloses to the CFTC the non-cooperation of the relevant client; this is typically a problem experienced by reporting future commission merchants and foreign brokers.

(Click here for a brief summary of the CFTC’s initial November 2013 OCR rules in the article, “CFTC Adopts Final Rules for Ownership and Control Reports” in the November 1, 2013 edition of Corporate & Financial Weekly Digest by Katten Muchin Rosenman LLP.)

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