CFTC releases second round of Dodd-Frank

The second round of proposed rules was released Oct. 19 by the Commodity Futures Trading Commission (CFTC). This second round includes four proposed rules with topics that range from definitions for regulation to additions to reporting requirements.

The first proposed rule sets definitions for “agricultural commodities.” As the term had not been specifically defined prior to Dodd-Frank, the CFTC was directed to explicitly define the term. To that extent, the proposed rule includes four categories of agricultural commodities. Those categories include:

  1. Enumerated commodities such as wheat and corn
  2. A general operational definition for commodities derived from plants or animals for human food, shelter, animal feed or natural fibers
  3. A catch-all category for products such as tobacco or horticulture
  4. Contracts based on a single underlying agricultural commodity such as indexes based on a single commodity

Among the discussion that took place over this rule was a question regarding onions. As onions are not considered a commodity, they are not considered an agricultural commodity.

CFTC released Ag Fact Sheet

CFTC released Ag Q&A

The second proposed rule establishes reporting requirements on position reports for physical commodity swaps. According to the rule, the sources of the reports would be either clearinghouses for those swaps that are clearable and the swaps dealers themselves for those that are not. The reports would be submitted on a daily basis electronically much like the large trader report already requires positions be reported in the futures market now. This report is intended to stand in place of an appropriate swaps data repository until they are operational. This report is hoped to be an interim until those repository are operational.

CFTC released Position Reports Fact Sheet

CFTC released Position Reports Q&A

The next proposed rule is intended to create further protection of consumer information under the Fair Credit Reporting Act. Under the proposed rule, entities regulated by the CFTC would be required to implement a written plan for the proper destruction of personal consumer information that is collected. Further, it establishes a regime to prevent consumer information from being used for marketing purposes. One question that was added at the open meeting was an option for consumers to permanently opt-out of their information from being used for marketing, rather than the every five years as was originally proposed.

CFTC released FCRA Fact Sheet

CFTC released FCRA Q&A

The final proposed rule expands the scope of consumer privacy protections under the Gramm-Leach-Bliley Act. Under that act, the CFTC was directed to create procedures for entities it regulates under which that entity may disclose consumer information to other affiliates and creates a process by which a consumer may opt-out of having their information shared. This proposed rule extends those rules to swaps dealers now that they are under the CFTC’s jurisdiction under Dodd Frank.

CFTC released GLBA Fact Sheet

CFTC released GLBA Q&A

The proposed rules now go into a comment period a different implementation timeframes. The two rules regarding swaps and swaps dealers are expected to be implemented on July 21, 2011.

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