UPDATE1-FACTBOX-CFTC proposes rule for reporting commodity swaps
(adds biofuels not falling under definition of agricultural commodity)
WASHINGTON, Oct 19 (Reuters) - The U.S. Commodity Futures Trading Commission proposed four additional rules on Tuesday as it works to increase oversight of the $615 trillion over-the-counter derivatives market mandated in the recently enacted Wall Street reform bill.
The U.S. futures regulator is working on rules for 30 topic areas, with some analysts predicting the CFTC could propose as many as 80 rules.
The CFTC plans to release the first draft of its rules by the end of the year, and must finalize them by July 2011.
Here are details of the new rules:
POSITION REPORTS FOR PHYSICAL COMMODITY SWAPS
Goal: provide data to help the CFTC police position limit rules for economically equivalent swaps.
Comment period: 30 days
Operational: in 6 to 10 months
* Covers 46 commodities including energy, metals and agricultural products.
* Required daily for "economically equivalent" swaps from clearing organizations, their members and swap dealers.
* Threshold for reporting: positions in any one futures-equivalent month comprised of 50 or more "economically equivalent" swaps (on a futures-equivalent basis).
* "Economically equivalent" means the swap is priced based on a futures settlement price, or is a "look-alike" contract to an existing futures contract.
* About 180 clearing members and swap dealers and five clearinghouses are expected to have to report.
* Similar to current reporting structure for large positions in commodity futures contracts traded on exchanges.
* System would be used for swaps position limit data until swap data repositories are up and running, potentially serving as the CFTC's main source for data.
* Proposal for position limits to come separately, within the next month or so.
DEFINITION OF AGRICULTURAL COMMODITY
Goal: needed to help the agency draft rules for agricultural swaps, and speculative position limits for agricultural commodities.
Comment period: 30 days
* Includes "enumerated commodities" such as wheat, cotton, corn, soybeans, livestock, among others.
* Includes commodities made from living organisms and used for human food, animal feed or natural fiber.
* Includes commodities such as tobacco, horticulture plants, and lumber.
* Includes contracts based wholly or principally on a single underlying agricultural commodity that may not necessarily involve the delivery of the commodity, such as the Minneapolis Grain Exchange wheat, corn and soybean price index contracts.
* Includes an index with more than 50 percent of any single agricultural commodity.
* Excludes an index made up of the prices of several agricultural commodities.
* Excludes products processed from plants or animals to create products used for industrial applications, such as polylactic acid used to make biodegradable packaging.
* Excludes biofuels, such as methane, biodiesel and ethanol used as fuel.
PROTECTION OF CONSUMER INFO IN FAIR CREDIT REPORTING ACT
Goal: protect consumer information held by entities subject to CFTC jurisdiction.
Comment period: 60 days
Who will be affected: Futures commission merchants, retail foreign exchange dealers, commodity trading advisors, commodity pool operators, introducing brokers, swap dealers and major swap participants.
* Provides rules for when an entity subject to CFTC oversight can make solicitations to a customer based on that individual's information.
* Requires consumer information to be disposed of using "reasonable" measures
CONSUMER PROTECTIONS IN GRAMM-LEACH-BLILEY ACT
Goal: expands rules to swap dealers and major swap participants detailing steps that must be taken to protect nonpublic, consumer information.
Comment period: 60 days (Reporting by Christopher Doering and Roberta Rampton; Editing by David Gregorio)
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