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BGC Derivative Markets, L.P 

Rule Amendment Submission 2015-09

October 6, 2015 

1. The texts of the amended Rules are appended as Attachment A. Any additions are underlined and any 

deletions are struck through. Only amended sections of rules are included. 

2. The date of intended implementation for these rules is ten business days following the filing of this 

submission. 

3. Attached, please find a certification that: (1) these rules comply with the Commodity Exchange Act 

(“Act”), and the Commission’s regulations thereunder; and (2) concurrent with this submission, BGC 

Derivative Markets, L.P. (“BGCDMLP”) posted on its website: (i) a notice of pending certification of the 

rule amendments with the Commission; and (ii) a copy of this submission. 

4. A concise explanation and analysis of the operation, purpose, and effect of each of the amended rules 

appears below. 

5. There were no opposing views expressed regarding these amended rules. 

6. Confidential treatment is not requested. 

CONCISE EXPLANATION AND ANALYSIS OF THE OPERATION, PURPOSE, AND EFFECT OF THE 

RULE AMENDMENT AND ITS COMPLIANCE WITH APPLICABLE PROVISIONS OF THE ACT, 

INCLUDING CORE PRINCIPLES AND THE COMMISSION’S REGULATIONS THEREUNDER

Pursuant to Commission Rule 40.6(a)(7)(vi), the following is a concise explanation and analysis of the operation, 

purpose, and effect of the amended rules. BGCDMLP is amending Rule 1302, which established the process for 

determining speculative position limits or position accountability rules with uniform language that will be adopted by 

a number of SEFs. That rule provides that BGCDMLP “shall adopt for each of the contracts of the Facility, as is 

deemed necessary and appropriate by the Facility, position limitations or position accountability levels for 

speculators.”

BGCDMLP is not adopting specific speculative position limits or position accountability levels at this time based on 

its conclusion that such limits or accountability levels are neither necessary or appropriate at this time for the 

following reasons. 

1. The information to administer limits or accountability levels cannot be readily 

ascertained. Position limits or accountability levels apply market-wide to a trader’s overall 

position in a given swap. To monitor this position, a SEF must have access to information 

about a trader’s overall position. However, a SEF only has information about swap 

transactions that take place on its own Facility and has no way of knowing whether a 

particular trade on its facility adds to or reduces a trader’s position. And because swaps may 

trade on a number of facilities or, in many cases, over-the-counter, a SEF does not know the 

size of the trader’s overall swap position and thus cannot ascertain whether the trader’s 

position relative to any position limit. Such information would be required to be supplied to a 

SEF from a variety of independent sources, including SDRs, DCOs, and market participants 

themselves. Unless coordinated by the Commission operating a centralized reporting system, 
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such a data collection requirement would be duplicative as each separate SEF required 

reporting by each information sources. 

Until the Commission provides for a centralized reporting system that is available to the 

SEFs, BGCDMLP is unable to perform the necessary analysis to set meaningful position 

limits or accountability levels. Alternatively, the Commission may set industry-wide position 

limit levels or position accountability levels for swaps. 

2. Position accountability levels at this time may not be necessary to address the goal of 

Core Principle 6. In this regard, the National Futures Association (“NFA”) conducted a 

statistical study on behalf of the SEFs in an effort to determine whether large transaction size 

might be a trigger for SEF position or accountability levels. Based on that study, the NFA 

concluded that

While the initial driver of the SEF-JCC March 2015 Swap Accountability Levels study was to determine 

appropriate SEF accountability levels pursuant to CFTC Core Principle 6, the study itself suggested that the 

swap market might not lend itself to notional transaction size accountability levels at the SEF level. While 

this study does not offer an official disposition as to the necessity or appropriateness of position 

accountability levels at the SEF level, it presents data which suggests that such accountability levels will do 

little to ‘reduce the potential threat of market manipulation or congestion,’ the stated goal of the Core 

Principle. 

Based upon the findings of the NFA Swap Accountability Levels Study and the limitations on BGCDMLP’s 

individual ability to access information to establish meaningful position limit or position accountability levels, BGC 

has concluded that it is neither appropriate or necessary to set such limit levels at this time. However, BGCDMLP 

will continue to reassess its current conclusion and will submit amendments to rule 1302 at such time that such 

limits are necessary and appropriate. 

Notwithstanding its conclusion that limit and position accountability levels are not appropriately set at this time, to 

meet the requirements of Core Principle 6, BGCDMLP will continue to transmit full transaction details for all 

transactions to SDRs daily under their Part 43 and Part 45 confirmation and reporting obligations. Additionally, 

BGCDMLP will continue to monitor trading on its facility as required for unusual activity such as concentrated 

transactions or transactions in a volume or pattern that is out of character for a participant's usual activity. 

BGCDMLP will also conduct a review of such activity. If the CFTC notifies BGCDMLP of any concerns of a 

particular participant or account, BGCDMLP will cooperate to facilitate a CFTC order to freeze trading or allow 

liquidation-only transactions for participants in the contract noted.