How to Become an Eligible Contract Participant

Paragraph 11. Edited by L. 111–203, § 721(a)(6), paragraph 11 added and former paragraph (11) deleted. Before the amendment, the wording reads as follows: “The term `commodity pool operator` means any person who carries out an activity which has the character of an investment fund, a syndicate or a similar form of undertaking and who, in this context, requests funds, securities or immovable property from third parties, either directly, either through capital injections, the sale of shares or other forms of securities; accepts or receives; or otherwise for the purpose of trading goods for future delivery on or subject to the rules of a contract market or a derivatives enforcement mechanism, except that the clause does not cover persons who do not correspond to the intent of the definition of the term which the Commission may establish by regulation, regulation or order. “Abs. (22). Ed. L. 111–203, § 721(a)(10), paragraph 22 added and former paragraph (22) deleted.

Prior to the amendment, the text read as follows: “The term `floor broker` means any person who, in or near a pit, ring, post office or other place provided by a mechanism for negotiating contracts on the market or derivatives for the assembly of persons employed in the same way, goods for any other person for future delivery to or subject to the rules of a contract market or contract market or a Derivatives Transaction Execution Facility buys or sells. E-Mini: A mini-contract traded exclusively via an electronic trading system. E-Mini is a trademark of CME Group, Inc. Yes. A borrower must be an “eligible party” as defined in subsection 1a(18) of the Commodity Exchange Act (“ACE”) to use an interest rate swap to cover the interest rate risk incurred by that borrower in connection with a commercial lending transaction. Eligible Contract Participant: A corporation, by . B a financial institution, insurance company or commodity group that is classified as a participant in the qualifying contract under the Commodity Exchanges Act because of its regulated status or the amount of its assets. This classification allows these people to make transactions (for example. B trading on a derivatives execution system) which are generally not available to unauthorised contract participants, i.e. retail investors.

Excluded commodity: Generally, the Commodity Exchanges Act defines an excluded commodity as follows: any financial instrument such as a security, currency, interest rate, debt instrument or credit rating; any economic or trade index that is not a narrow commodity index; or any other value beyond the control of the participants and associated with an economic consequence. See the definition in the Commodity Exchanges Act for excluded goods. Exchange for Physicals (EFP): A transaction in which the buyer of a cash commodity transfers an appropriate amount of long-term contracts to the seller or receives a corresponding amount of short futures contracts from the seller at a mutually agreed price difference. In this way, the opposite hedges in the futures contracts of both parties are completed at the same time. Also called Exchange of futures contracts for cash, AA (relative to real values) or ex-pit transactions. Section 723(a)(2) of the Dodd-Frank Wall Street Reform and Consumer Protection Act amended Section 2(e) of the Commodity Exchange Act or CEA to provide that “it is unlawful for any person who is not an [eligible party or ECP] to enter into a swap unless the swap is entered into or is subject to the rules of a regulatory body, which is referred to as a contract contract in accordance with Section 5. On May 23, 2012, the Commodity Futures Trading Commission, in collaboration with the Securities and Exchange Commission (“SEC” and jointly with the CFTC”Commissions), issued final rules that further define the term “eligible party” and provide interpretations of the ECP`s definition issues. Exchange: A central market with established rules and regulations where buyers and sellers meet to trade futures and option contracts or securities. Exchanges include designated contract markets and facilities for the execution of derivatives transactions. Paragraph 31). Edited by L. 111–203, § 721(a)(15), paragraph 31 added and former paragraph (31) deleted.

Prior to the amendment, the text read as follows: “The term `introducing broker` means any person (with the exception of a person who chooses to be registered and registered as an associate of a forward commission trader) who requests or accepts orders to buy or sell a good for future deliveries on or subject to the rules of a contract market or a derivatives transaction execution mechanism, who does not accept money. Securities or real estate (or loans derived therefrom) for the margin, guarantee or coverage of transactions or contracts arising out of or likely to result therefrom. `An Eligible Contract Participant (ECP) is a company or natural person that is authorised to carry out certain financial transactions that are not open to the average investor. PCEs are often companies, partnerships, organizations, trusts, brokerage firms or investors that have a total wealth of several million. There are very strict requirements before you can obtain eligible contract participant status. The term “currency futures transaction” refers to a transaction that exclusively involves the exchange of 2 different currencies at a specific future time at a fixed rate agreed at the beginning of the contract covering the exchange. The Council may, by regulation or regulation, include or exclude from the term “futures commission dealer” any person who solicits or accepts orders for agreements, contracts or transactions subject to this Chapter or acts as consideration in an agreement, contract or transaction subject to this Chapter and who accepts money, securities or real estate (or loans in lieu thereof) as margin. guarantee or secure the operations or contracts resulting from or which may result therefrom if the Commission finds that the rule or regulation fulfils the objectives of this Chapter. Point E shall be without prejudice to the applicability of this Chapter or to the competence of the Commission in respect of foreign currency agreements, contracts or transactions referred to in point (c)(2) of Section 2 of this Title. How does the CCB define an “eligible contractor”? For the purposes of clause (i), the framework agreement shall be considered a swap only for any agreement, contract or transaction covered by the framework agreement which is a swap referred to in point A. Economically available delivery: The part of the deliverable delivery of goods which is in a delivery position against a forward contract and which is not otherwise available for delivery.

For example, government bonds held by long-term mutual funds are not considered part of the economically available offering of a Treasury bond futures contract. .