CFTC Requirements for Large Trader Reporting of Physical Commodity Swaps

On July 22, 2011, the CFTC published its final Part 20 regulations regarding large trader reporting requirements for certain physical commodity swaps that became effective on September 20, 2011 (see 76 FR 43851).  On September 16, 2011, the CFTC issued a letter granting temporary and conditional relief from complying with the requirements of regulations 20.3 and 20.4 regarding large trader reporting of physical commodity swaps activity until November 21, 2011, for cleared swaps, and January 20, 2012, for uncleared swaps provided certain conditions are met (see DMO 9-16-2011 Letter). 

CBOT Products under Commodity Exchange Act (CEA) Section 4d

CBOT lists a number of cleared-only swap products for which the CFTC, pursuant to CEA Section 4d orders granted in 2008 and 2009, permits positions in the cleared-only contracts and the funds associated with those positions to be commingled with positions and funds otherwise required to be held in a customer segregated account.  In accordance with the orders, CBOT has reported open interest in these products and has required the daily submission of large trader reports pursuant to CBOT Rule 561 (“Reports of Large Traders”) using the existing large trader reporting system and protocols utilized for reporting futures positions.  A list of these CBOT products is set forth below.

Denatured Fuel Ethanol Forward Month Swaps

Cash-Settled Options on Denatured Fuel Ethanol Forward-Month Calendar Swaps
Corn Calendar Swaps
Soybean Calendar Swaps
Wheat Calendar Swaps

Recently, the CFTC has advised CBOT that these products are subject to swap reporting under the new Part 20 regulations.  New regulation 20.10(d) requires the reporting of these products under both the current large trader reporting system and under new Part 20 until final CFTC definitions further defining the term “swap dealer” become effective.  Accordingly, positions in the above-referenced products should continue to be reported under the current futures larger trader reporting system and simultaneously under new Part 20 beginning November 21, 2011, until notified otherwise.

CME ClearPort

Recently, Market Regulation has received several inquiries as to whether the Part 20 requirements affect positions resulting from transactions submitted for clearing via CME ClearPort.  The final rules in Part 20 require large trading reporting exclusively for swaps positions that are based on the same commodity underlying a futures contract that is listed in Commission Regulation 20.2 (Covered Agricultural and Exempt Futures Contracts).  Currently, the only swaps cleared by CME Clearing that may be affected by the Part 20 large trader reporting requirements are those CBOT swaps listed on the first page of this Advisory Notice. 

Transactions submitted through CME ClearPort that clear as either futures or options contracts are not affected by the Part 20 requirements.

Additionally, futures or options transactions that are submitted through CME ClearPort that are part of an Exchange for Related Position transaction may involve the execution of OTC swaps.  To the extent there is a resulting swap position created by the transaction that remains open as of the end of a reporting day, that position may require reporting under Part 20.

Questions regarding this Advisory Notice may be directed to the following individuals in Market Regulation:

Joe Hawrysz, Director, 312.341.7750

James Moran, Director, 312.435.3671

For media inquiries concerning this Advisory Notice, please contact CME Group Corporate Communications at 312.930.3434 or news@cmegroup.com.