Dodd-Frank and the Spoofing Prohibition in Commodities Markets

The Dodd-Frank Act amended the Commodity Exchange Act and adopted an explicit prohibition regarding activity commonly known as spoofing in commodities markets. This Note argues that the spoofing prohibition is a necessary step towards improved market discipline and price integrity in the relevant commodities markets. It fills an important gap in the CEA in relation to an elusive form of price manipulation activity by providing an explicit statutory authority on which regulators and market operators may rely in policing suspect trading strategies falling under the spoofing umbrella. Congress’ explicit denouncement of spoofing as an illegal act has ramifications not only for traders, but also for brokers and market makers. In the past, when courts have considered the issue of secondary liability of brokers regarding manipulative activity of their customers in the context of wash sales, they have determined the CEA’s explicit prohibition of wash sales and the relatively easier identification of wash sales activity as important factors that may potentially increase the secondary liability risk of derivatives brokers. Applying the same analogy to spoofing, greater public awareness and the increasing visibility of spoofing activity (resulting from improvements in the monitoring systems of regulators and market operators) will provide strong incentives for market participants to adapt to changing norms. However, areas of concern, such as risk of selective enforcement and inconsistencies among the applicable market rules, will pose challenges in the spoofing prohibition’s implementation. Therefore, regulators must seek cooperation with relevant market operators to encourage structural reform and self-regulatory measures, such as implementation of appropriate structural safeguards into the trading infrastructure

A Regulatory Retreat: Energy Market Exemption from Private Anti-Manipulation Actions Under the Commodity Exchange Act

In order to facilitate greater reform in energy markets, Dodd-Frank granted the CFTC wide-ranging powers as part of the greater mandate given to the CFTC in relation to OTC-swaps and the daily derivatives trading activity in commodities futures and options markets. As a result, Dodd-Frank subjected electricity market transactions—which traditionally occur under the oversight of the Federal Energy Regulatory Commission in markets organized around independent system operators and regional transmission organizations—to the anti-manipulation prohibitions of the Commodity Exchange Act. Thus, differently from FERC’s regime, the post-Dodd-Frank statutory framework opened the way for enforcement of market discipline in electricity markets through a private right of action under Section 22 of the CEA. This development drew strong opposition from the industry, and also caused a conflict between courts and the CFTC in the interpretation of the relevant law. In October of 2016, the CFTC stepped back by issuing a final exemptive order to the participants of seven national energy markets, which constitute almost the entire U.S. wholesale electricity market. The withdrawal of the private right of action conflicts with the position previously advocated by the CFTC itself. It also raises questions about the CFTC’s use of its exemptive powers, as the removal of a statutory right through agency rulemaking may potentially be in conflict with the text and statutory purpose of the CEA as amended by Dodd-Frank. The exemption not only removes an important tool in enforcing market discipline, but also has the potential to undermine the reform efforts in the transition of U.S. energy markets to a smart grid. This Note will provide a history of the developments that have unfolded since the enactment of Dodd-Frank in relation to the availability of a private right of action under the CEA in energy markets. The Note also analyzes commonly raised arguments against the availability of a private right of action and presents the various counter-arguments

Quasi-optimal grouping for broadcast systems with hierarchical modulation

Recently, we proposed to combine time sharing with hierarchical modulation to increase the transmission rate of broadcast systems. Our proposal involves to group the receivers in pairs in order to transmit with hierarchical modulation. We introduced several grouping strategies but the optimal matching remained an open question. In this letter, we show that the optimal grouping is the solution of an assignment problem, for which efficient algorithms exist such as the Hungarian method. Based on this algorithm, we study the performance of the optimal grouping in terms of spectrum efficiency for a DVB-S2 system.Comment: Submitte

Rain-flagging of the Envisat altimeter

As the goals for altimetric measurements become ever more precise, there is concern about the reliable detection and discarding of rain contaminated data. A dual-frequency rain detection technique developed for the Ku- and C-band TOPEX altimeter, is adapted for the Ku- and S-band RA-2 altimeter on Envisat. Of particular concern is the selection of a suitable threshold to minimise the quantity of good data inadvertently discarded

A visible record of eddies in the southern Mozambique Channel

The flows around Madagascar feed into the Agulhas Current, but there have been few hydrographic studies of the flow within the Mozambique Channel. Some cruise and altimetric data point to this being a region of high mesoscale activity, with eddies migrating through the area. Here we show how ocean colour data throw light on the behaviour of eddies in the southern Mozambique Channel