Last week, the CFTC issued a notice that it had fined Amaggi Exportação e Importação Ltda. $175,000 for multiple reporting violations associated with CFTC Form 204 (reporting for positions in cash positions in grains and soy products). This is a long standing set of reports that allows the CFTC to connect cash positions with futures holdings for its oversight and surveillance activities.
The firm had failed to file the required reports for more than a one year period. After filing the overdue reports, eight of the reports were incorrect.
Firms should remember that the CFTC reporting requirements are obligatory regardless of their trading location - activity in US futures markets is, part and parcel, an acceptance of the CFTC's jurisdiction.
While the CFTC's new position limits in energy and other products became effective on March 21, 2021, compliance is due by January 1, 2022 for all twenty five contracts under CFTC position limits (up from nine). It is mandatory for firms trading in the products now covered by CFTC position limits, as opposed to the general coverage of exchange futures under exchange rules subject to CFTC position limit oversight, to be compliant with both the CFTC and exchange rules that now cover the CFTC position limt contracts. The rules for the 9 "legacy contracts" and the addition 16 new agricultural, energy and metals also include new rules including "economically equivalent" swap contracts under the position limt rules.
Firms should be well underway on identifying obligations under these new rules and implementing both process and data systems requirements to assure compliance. Please contact DCM if you have questions concerning the application of these rules to your activities, potential impacts of these rules on your risk and compliance programs, and your preparations for compliance.