CFTC’s Rulemaking on Section 732 Discussed on CMC’s Policy Call

Earlier this week on CMC’s member-only policy call, staff and members discussed the salient points of the CFTC’s rule on internal business conduct standards for FCMs, IBs, SDs and MSPs. Specifically, we discussed the rule’s provisions around Section 732 of the Dodd-Frank Act, which addresses conflicts of interest between research and trading/business personnel at the aforementioned types of organizations. While the concept of the rule is sound and some of its provisions make sense, the rule on the whole is far too onerous and risks causing great (arguably, irreparable) harm to the commodities research and advisory business.

We are glad to note that the CFTC has issued a no-action letter staying enforcement of the rule for 60 days. Presumably, the rule will be under careful review and reconsideration at the CFTC during that 60-day period. This is a topic that CMC is sure to not only closely follow but also continue to actively engage in over the next several weeks and months.

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