The CFTC proposed a supplement to an existing proposal to amend its regulations governing commodity broker bankruptcies.
As previously covered, the CFTC proposed amendments to "comprehensively update" Part 190 ("Bankruptcy") regulations. The supplement comes in response to public comment on the original proposal, in particular as to the treatment under Proposed Rule 190.14(b) of a derivatives clearing organization's ("DCO") operations following insolvency of the DCO. In particular, the supplement would amend the proposal to stay termination of systemically important DCO contracts for a brief period after bankruptcy (to facilitate a Title II resolution), but without undermining the netting status of those contracts under relevant bank capital and related rules.
Commissioner Dan Berkovitz was the only Commissioner to put forth a written statement on the proposal. He commended the proposal for soliciting comments on alternative views to address the unintended consequences of the original proposal.
Comments on the proposal must be submitted within 30 days after publication in the Federal Register.
Commentary
As the CFTC notes, the supplemental proposal is largely in response to concerns raised in a letter by the FIA. (The Qualifying Master Netting Agreement issue is highlighted on pp. 4-6 of the letter.)
Primary Sources
- CFTC Voting Draft: Part 190 Bankruptcy Regulations
- CFTC Press Release: CFTC Finalizes Rules to Improve Swap Data Reporting, Approves Other Measures at September 17 Open Meeting
- CFTC Statement, Dan M. Berkovitz: Statement Regarding Part 190 Bankruptcy Regulations, Supplemental Proposal
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