CFTC Approves Final Rules Regarding Electronic Trading Risk Principles and Bankruptcy Regulations

On December 8, the Commodity Futures Trading Commission (CFTC) approved a final rule amending CFTC Regulation Part 38 to address the risk of a designated contract market’s (DCM) trading platform experiencing a market disruption due to electronic trading. The final rule sets forth three principles applicable to DCMs concerning:

• the implementation of exchange rules applicable to market participants to prevent, detect and mitigate market disruptions and system anomalies;
• the implementation of exchange-based, pre-trade risk controls for electronic orders; and
• the prompt notification of CFTC staff by DCMs of any significant market disruptions on their electronic trading platform.

The final rule provides that a DCM can comply with these principles by adopting certain acceptable practices, including by implementing rules and risk controls reasonably designed to prevent, detect and mitigate market disruptions and system anomalies associated with electronic trading.

Additionally, the CFTC also unanimously approved comprehensive amendments to CFTC Regulation Part 190, which governs bankruptcy proceedings of commodity brokers. For a more fulsome description of the amendments, please see Katten’s April 29, 2020 Advisory on the proposed rules.

The press release and access to the final rules are available here.

CFTC Unanimously Approves Technical Amendments to Reflect Organizational Changes

On December 8, the Commodity Futures Trading Commission (CFTC) approved a final rule making technical amendments to CFTC regulations to align with recent organizational changes, remove unnecessary language, and correct inaccurate text and other typographical errors. The amendments are immediately effective upon publication in the Federal Register, unless otherwise noted. 

The press release is available here.