In January 2019 France passed Act 2019-75, which authorised the government to take measures to prepare for the United Kingdom's departure from the European Union without a deal by way of ministerial orders, particularly in the area of financial services. Subsequently, in February 2019 the government adopted a ministerial order which, among other things, aims to ensure that International Swaps and Derivatives Association-type master agreements on financial services continue to be used.
The Federal Council recently agreed to push back the effective date for derivative transaction reporting duties for small non-financial counterparties to 1 January 2024 and extend the corresponding transitional period. The corresponding amendment to the Financial Market Infrastructure Ordinance will enter into force on 1 January 2019. The reporting duties already in force for other market participants are unaffected.
The International Swaps and Derivatives Association recently published proposed amendments to its 2014 Credit Derivatives Definitions relating to narrowly tailored credit events. The proposal comes in the wake of concerns raised by market participants over certain failure to pay credit events, or claimed failure to pay credit events – in particular, the 2017 agreement by Hovnanian Enterprises to default on an interest payment to an affiliate in order to obtain favourable refinancing terms from GSO Partners.
The Commodity Futures Trading Commission (CFTC) recently published the 2019 examination priorities for its three divisions. This marks the first time that the agency has published its divisions' examination priorities, which serves as part of the CFTC's efforts to advance its Project KISS (which stands for 'Keep It Simple, Stupid') initiative and demonstrates areas that the divisions view as particularly important to self-regulation in US derivatives markets for the coming year.
Towards the end of 2018, the Commodity Futures Trading Commission (CFTC) proposed significant revisions to the framework governing swap trading through swap execution facilities and designated contract markets. Many of these amendments are in line with recommendations contained in CFTC Chair J Christopher Giancarlo's white paper on swaps regulation reform. The proposed changes are intended to reflect developments in the swaps markets since the CFTC's implementation of its current regulations.
Commodity Futures Trading Commission Chair J Christopher Giancarlo recently released a white paper recommending potential reforms to the agency's approach to the extra-territorial, or cross-border, application of its swaps trading rules. According to Giancarlo, the reforms are intended to create a territorial, risk-based approach that relies on greater deference to regulators in jurisdictions with comparable regulatory frameworks (comparable jurisdictions), where appropriate.
The National Futures Association (NFA) recently adopted an interpretive notice that requires futures commission merchants, introducing brokers, commodity pool operators and commodity trading advisers to disclose to customers certain potential risks involved when dealing with virtual currencies and virtual currency derivatives. The notice reflects the NFA's concern that, among other things, customers may not fully understand the nature of these products or the losses that could be sustained.
The UK Financial Conduct Authority (FCA) recently published a discussion paper to gauge market participants' views on how the future development of distributed ledger technology (DLT) should be regulated by the FCA in FCA-regulated markets. As industry efforts to use DLT continue, the FCA expects that in the second half of 2017 and into 2018 there will be more movement from the 'proof of concept' stage to 'real-world' deployments.