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MFA, SIFMA and GFXD Submit Joint Letter to the CFTC with Proposed Safe Harbor for the ECP Definition

› Issues & Policy › MFA, SIFMA and GFXD Submit Joint Letter to the CFTC with Proposed Safe Harbor for the ECP Definition

January 19, 2012

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Topics: Gary Gensler Mary Schapiro, Commodity Futures Trading Commssion, CFTC, Securities and Exchange Commission, SEC, Definition of "Eligible Contract Participant", Global Foreign Exchange Division, GFXD, eligible contract participant, ECP, commodity pool, assets under management, U.S. institutional foreign exchange markets, Bank for International Settlements, non-bank financial insitutions, market liquidity, investment funds, systemic risk, close-out netting, institutional derivatives products, trading advisor, algorithms, retail foreign exchange market, commodity pool operator, investment advisers, registered investment companies, bucket shops, James Kemp, Stuart Kaswell, Jade Investment Group LLC, Jacob Juma Omukwe, Nicholas Trimble, Capstone FX Quantitative Analysis Inc., Beekeepers Fund Capital Management LLC, NASA, Cyber Market Group LLC, Patrick Rakotonanahary, FCM, First Capital Savings and Loan, Jeffery Alan Lowrance, Department of Justice, Queen Shoals LLC, Charlotte M. Hanson, Sidney Stanton Hanson, Barki LLC, Forest Glen, ponzi scheme, Alpha Trade Group, S.A., short-term REIT, long-term REIT, Gary Martin, Brenda Martin, Highland Stone Capital Management LLC, Forex Capital Trading Group Inc, CTA, forex, pooled investment fund, retirement fund,
From: MFA, Stuart Kaswell, Global Foreign Exchange Division, James Kemp

To:

Gary Gensler (CFTC), Mary Schapiro, (SEC)
Jill Sommers (CFTC), Bart Chilton (CFTC), Scott D. O'Malia (CFTC), Mark Wetjen (CFTC), David Stawick (CFTC), Daniel Berkovitz, Richard Shilts, Ananda Radhakrishnan, Elisse B. Walter (SEC), Luis Aguilar (SEC), Troy Paredes (SEC), Daniel M. Gallagher (SEC), Elizabeth Murphy (SEC), Robert Cook, David Blass

On January 19, MFA, SIFMA, and GFXD submitted a joint letter to the CFTC with a proposed safe harbor from its proposed eligible contract participant (ECP) definition. The proposed safe harbor makes it clear that notwithstanding any other language in the Commodity Exchange Act (CEA), a commodity pool shall be an eligible contract participant if the commodity pool: (1) has total assets exceeding $10,000,000; and (2) is not formed for the purpose of evading regulation under Sections 2(c)(2)(B) and 2(c)(2)(C) of the CEA. Due to the CFTCs proposed look-through where all direct and indirect participants of a commodity pool must be ECPs in order for the pool to be an ECP, in the absence of such a safe harbor, a significant number of investment funds will not qualify as ECPs and will have to exit the U.S. institutional foreign exchange markets.

Related Legislation:
Section 1a(18)(iv)(II) of the Commodity Exchange Act
Section 2(c)(2)(B) of the Commodity Exchange Act
Section 2(c)(2)(c) of the Commodity Exchange Act
Investment Company Act of 1940
Dodd-Frank Wall Street Reform and Customer Protection Act of 2010
Dodd-Frank Act
Administrative Procedure Act SS 4 and 5 U.S.C. SS 553(b)(c) and (d) (2006)
Administrative Procedure Act
Related Rules:
CFTC: RIN 3235-AK65
SEC: File No. S7-39-10
CFTC's proposed rule SS 1.3 (m)
Proposed CFTC ECP Rule
First Am. Discount Corp. v. Commodity Futures Trading Comm'n 22 F.3d 1008
Northeast Maryland Waste Disposal Authority v. EPA 358 F.3d 936
CFTC v. Jade Investments Group LLC et al
Civil Action No. 11-CF-00128
CFTC v. Capstone Quantitative Analysis Inc. et al.
11-CF-02887-PAB
CFTC v. Patrick Rakotonanahary and Cyber Market Group LLC
10-CF-00144-SOM-LEK
CFTC v. First Capital Savings and Loan et al.
11-CV-04741
CFTC v. Queen Shoals LLC et al.
09-CV-00335
CFTC v. Barki LLC et al.
09-CV-106
CFTC v. Alpha Trade Group S.A. et al.
11-CV-1584-GAP-DAB
CFTC v. Queen Shoals Consultant
11-CV-00132-RJC-DSC
CFTC v. Highland Stone Capital Management LLC et al.
11-CIV-5209
CFTC v. Jeremiah C. Yancy et al.
10-CV-02955
CFTC v. David L. Ortiz et al.
11-CV-14063
CFTC v. Flint-McClung Capital LLC et al.
11-CV-01644-CMA
CFTC v. Louis J. Giddens Jr. et al.
11-CV-02038-WSD
CFTC v. Mark J. Adrian
CFTC Docket No. 11-14
CFTC v. Invers Forex LLC et al.
11-CV-22275
CFTC v. ACJ Capital Inc. et al.
11-CV-01319-JAF
CFTC v. Jeffery L. Groendyke
11-CV-00448
CFTC v. Willie Lee Cloud Jr.
10-CV-00706
CFTC v. Yellowstone Partners Inc. et al.
10-CV-85-FL
CFTC v. Helmut H. Weber
10-CV-00534-DGC
CFTC v. Randall Lynn Stuckey et al.
11-CV-00311
CFTC v. Larry Benny Groover et al.
11-CV-00064-RAS-DDB
CFTC v. Keith F. Simmons et al.
11-CV-23-RJC-DCK
CFTC v. PMC Strategy LLC et al.
11-CV-73
CFTC v. Anthony Eugene Linton
11-CV-00021-DCB
In the Matter of Darren Lee Shanks and Forex Auto Profits LLC
CFTC Docket No. 11-03
CFTC v. FX Professional International Solutions Inc. et al.
10-CV-22311-PCH
CFTC v. CRE Capital Corporation et al.
09-CV-00115-RWS
CFTC v. Ronald E. Satterfield et al.
10-CV-2893-RMPG
CFTC v. Complete Developments et al.
10-CV-02287
CFTC v. Total Call Group Inc. et al.
10-CV-00513
CFTC v. Billion Coupons Inc.
09-CV-00068-JMS-LEK
CFTC v. Highland Capital Management et al.
10-CV-2654
CFTC v. CMA Capital Management LLC et al.
10-CV-21074-MGC
CFTC v. Trevor Cook et al.
09-SC-3332(MJD/JJK)

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