CFTC Proposes New Reporting Regime for Swaps on Certain Physical Commodities Pursuant to New Dodd-Frank Provisions

(Via K&L|Gates)

On November 2, 2010, the Commodity Futures Trading Commission (“CFTC”) published a proposed new reporting framework for swaps based on physical commodities similar to the CFTC’s current large trader reporting regime for exchange-traded futures contracts.  The public comment period ends December 2, 2010.

The proposed regulations would require clearing organizations, clearing firms and swap dealers to report to the CFTC daily, on an account-by-account basis, their aggregate proprietary and customer positions in swaps that are economically equivalent to the exchange-traded futures contracts on physical commodities specified in the proposed regulations.  Although the proposed regulations would not require commercial end-users to file daily reports, they would require end-users to keep records relating to reported swap positions and related cash and futures market transactions.

The CFTC has proposed its new Part 20 regulations pursuant to Section 737(a)(4) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, which added new Section 4a(a)(5) of the Commodity Exchange Act that authorizes the CFTC, as appropriate, to establish speculative position limits for swaps based upon physical commodities that are economically equivalent to exchange-traded futures or option contracts.  The proposed reporting framework is intended to provide the CFTC with the swap market information it needs to develop speculative position limits for swaps based upon physical commodities that are economically equivalent to exchange-traded futures contracts on the same commodities.

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