A rule designed to clamp down
on manipulation and fraud in the futures and swaps market
became the first substantive derivative rule passed under
Dodd-Frank on July 7.
But it does not reflect the
industry’s warning against lowering the scienter
standard without offering guidance on what does and
doesn’t constitute an offence.
Under the Commodity Futures
Trading Commission’s (CFTC) rule, the regulator
can now establish fraud-based manipulation by showing a trader
acted recklessly, and without having to show that act had any
Previously it was necessary
to prove the trader intended to affect a price and that this
had an effect on the market.
US counsel are surprised the CFTC’s final rule
is substantially the same as the proposed form....