Lawyers slam CFTC's "mindboggling" probe of EFS market it helped set up
The US Commodity Futures Trading Commission (CFTC) tried to regulate exchange of futures for swaps (EFS) transactions in 2004 and again in 2008. Then it tried to ban contingent EFS in 2010. All these attempts failed. Now the CFTC is investigating EFS trades for illegal off-exchange trading activity. Lawyers see a pattern emerging. Peter Madigan reports
Sometime around the turn of the year, the US Commodity Futures Trading Commission (CFTC) quietly started investigating the exchange of futures for swaps (EFS) market – in which over-the-counter swaps are executed bilaterally before being converted into cleared energy or metal futures contracts. A series of ‘special call’ notices were sent to major dealers, asking for information on trades dating back to at least the start of 2012, and – as a side-effect – baffling the recipients.
The notices
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