• CFTC Update: Eligible Contract Participant Definition and Retail Forex Pools
  • May 23, 2012 | Authors: William J. Breslin; Miles E. Kitchin; David S. Mitchell
  • Law Firms: Fried, Frank, Harris, Shriver & Jacobson LLP - Washington Office ; Fried, Frank, Harris, Shriver & Jacobson LLP - New York Office
  • On April 18th, 2012, the Commodity Futures Trading Commission (the "CFTC") and the Securities and Exchange Commission (the "SEC", and together with the CFTC, the "Commissions") adopted joint final rules further defining the terms "swap dealer" ("SD"), "security-based swap dealer" ("SBSD"), "major swap participant" ("MSP"), "major security-based swap participant" ("MSBSP"), and "eligible contract participant" ("ECP") (the "Final Rules"). The Final Rules generally will become effective 60 days following publication in the Federal Register. Of particular concern to fund managers in connection with the adoption of the Final Rules was a look-through requirement in the ECP definition contained in the Commissions' December 21, 2010 proposed rules (the "Proposed Rules") that would have required each participant in a commodity pool to satisfy the ECP definition in order for the commodity pool itself to satisfy the ECP definition for the purpose of the CFTC's retail forex rules. However, as described below, these concerns have substantially been addressed in the Final Rules. The ECP look-through requirement, as modified in final form and as described below, becomes effective on December 31, 2012.