Derivatives, Legislative and Regulatory Weekly Update (October 10, 2025)
Client Alert | October 10, 2025
From the Derivatives Practice Group: This week, ESMA and ISDA were particularly active, especially concerning CPP participation requirements and authorizations.
New Developments
White House Withdraws Nomination for CFTC Chair. On September 30, according to various sources, Brian Quintenz confirmed that the White House had withdrawn his nomination for CFTC Chair.
CFTC Staff Issues Advisory on Certain Contract Markets. On September 30, the CFTC issued an advisory to futures commission merchants, introducing brokers, designated contract markets, derivatives clearing organizations, and registered futures associations about certain contract markets regarding preparations with respect to potential market disruption during a lapse in government appropriations. The advisory is a reminder of certain applicable regulatory requirements and does not create new obligations.
CFTC Issues Federal Register Notice Regarding Operations During Lapse in Appropriations. On September 30, the CFTC issued a notice to provide for the continuation, shutdown, and resumption of certain operations in the event of a lapse in appropriations, and to alert all persons regulated by or engaged in proceedings at the Commission of these provisions. The CFTC also published a Plan for Lapse in Appropriations.
CFTC Staff Issues No-Action Letter Regarding Electricity Binary Options. On September 30, the CFTC’s Division of Market Oversight and the Division of Clearing and Risk announced they have taken a no-action position regarding swap data reporting and recordkeeping regulations for binary options in response to a request from Electron Exchange DCM LLC, a designated contract market, and Electron Exchange DCO LLC, a derivatives clearing organization. In the request, Electron Exchange DCM LLC represented that it intends to list cash-settled binary options with underlying commodities relating to electricity and/or power markets. The divisions stated that they will not recommend the CFTC initiate an enforcement action against either entity or their participants for failure to comply with certain swap-related recordkeeping requirements and for failure to report to swap data repositories data associated with binary option transactions executed on or subject to the rules of Electron Exchange DCM LLC and cleared through Electron Exchange DCO LLC, subject to the terms of the no-action letter.
CFTC Announces Participation in World Investor Week 2025. On September 30, the CFTC’s Office of Customer Education and Outreach announced its participation in World Investor Week, a global effort to emphasize the importance of investor education and protection. The CFTC said that, during the week, from October 6-12, it will warn the public about current scam trends and red flags through social media and webinars.
New Developments Outside the U.S.
ESMA Consults on CCP Participation Requirements. On October 9, ESMA launched a public consultation on draft Regulatory Technical Standards on the elements to be considered when central counterparties (CCPs) define participation requirements. ESMA encouraged stakeholders to share their views about the elements that a CCP should consider when establishing its admission criteria, and assessing the ability of non-financial counterparties acting as clearing members to meet margin requirements and default fund contributions. [NEW]
ESMA Publishes Technical Standards on CCP Authorizations, Extensions, and Validations. On October 9, ESMA published its Final Reports on the Regulatory Technical Standards on CCPs’ authorizations, extensions of authorization and model validations, following the review of the European Market Infrastructure Regulation (EMIR 3). According to ESMA, EMIR 3 introduces several measures to make EU clearing services and EU CCPs more efficient and competitive, notably by streamlining and shortening supervisory procedures for initial authorizations, extensions of authorization and validations of changes to models and parameters. [NEW]
ESMA Organizes First Data Day Focused on Burden Reduction and Digitization. On October 7, ESMA announced that the first ESMA Data Day will be held on December 2, 2025. ESMA said that this flagship event will showcase how smarter data use and digitalization can simplify the regulatory framework and reduce reporting burdens while steering clear of deregulation. [NEW]
EU Supervisory Authorities Warn Consumers of Risks and Limited Protection for Certain Crypto-assets and Providers. On October 6, the European Supervisory Authorities (EBA, EIOPA and ESMA – the ESAs) issued a warning to consumers, reminding them that crypto-assets can be risky and that legal protection, if any, may be limited depending on the crypto-assets at issue. The warning was accompanied by a factsheet explaining what the new EU regulation on Markets in Crypto-Assets means for consumers. The ESAs recommended concrete steps consumers can take to make informed decisions before investing in crypto-assets, such as checking if the provider is authorized in the EU. [NEW]
ESMA Releases 2026 Work Program – Advancing on More Integrated, Accessible, and Competitive Financial Markets in the EU. On October 3, ESMA published its 2026 Annual Work Program. Guided by its multi-annual strategy for 2023–2028 which sets out three strategic priorities and two thematic drivers, ESMA’s 2026 work program focuses on delivering on core policy and supervisory mandates while contributing to ambitious reforms for more integrated, accessible, and innovative EU capital markets.
New Industry-Led Developments
ISDA Publishes Clearing Model Comparison. On October 10, ISDA updated a comparison of available US Treasury (UST) clearing models, as well as models for clearing repos at other central counterparties globally and models for clearing derivatives. This comparison is intended to help market participants understand existing and potential new clearing models for UST cash and repo transactions as they implement the US SEC’s recent rules requiring clearing of such transactions. [NEW]
ISDA Publishes Report on the Impact of the FRTB on Correlation Trading. On October 7, ISDA published a report on the capitalization of the correlation trading portfolio (CTP) under the Fundamental Review of the Trading Book. According to ISDA, the paper sets out the industry position on best practice as it is applied to the current regulation. It also makes recommendations for improvements that ISDA said would help to clarify regulatory requirements for the CTP to ensure alignment with how banks manage the risk of such products and support a globally consistent approach to the CTP to maintain liquidity in this important market. [NEW]
ISDA CEO Comments on Path to Greater CFTC-SEC Alignment. On October 2, ISDA CEO Scott O’Malia offered informal comments on a path to greater CFTC-SEC alignment. He highlighted three key areas where greater coordination between the CFTC and SEC is critical and market participants can help to deliver solutions that would increase compliance, cut costs and create a robust collateral infrastructure. These three areas include (1) regulatory reporting, (2) Treasury clearing, and (3) market liquidity and collateral infrastructure.
The following Gibson Dunn attorneys assisted in preparing this update: Jeffrey Steiner, Adam Lapidus, Marc Aaron Takagaki, Hayden McGovern, Karin Thrasher, and Alice Wang*.
Gibson Dunn’s lawyers are available to assist in addressing any questions you may have regarding these developments. Please contact the Gibson Dunn lawyer with whom you usually work, any member of the firm’s Derivatives practice group, or the following practice leaders and authors:
Jeffrey L. Steiner, Washington, D.C. (202.887.3632, jsteiner@gibsondunn.com)
Michael D. Bopp, Washington, D.C. (202.955.8256, mbopp@gibsondunn.com)
Michelle M. Kirschner, London (+44 (0)20 7071.4212, mkirschner@gibsondunn.com)
Darius Mehraban, New York (212.351.2428, dmehraban@gibsondunn.com)
Jason J. Cabral, New York (212.351.6267, jcabral@gibsondunn.com)
Adam Lapidus, New York (212.351.3869, alapidus@gibsondunn.com )
Stephanie L. Brooker, Washington, D.C. (202.887.3502, sbrooker@gibsondunn.com)
William R. Hallatt, Hong Kong (+852 2214 3836, whallatt@gibsondunn.com )
David P. Burns, Washington, D.C. (202.887.3786, dburns@gibsondunn.com)
Marc Aaron Takagaki, New York (212.351.4028, mtakagaki@gibsondunn.com )
Hayden K. McGovern, Dallas (214.698.3142, hmcgovern@gibsondunn.com)
Karin Thrasher, Washington, D.C. (202.887.3712, kthrasher@gibsondunn.com)
Alice Yiqian Wang, Washington, D.C. (202.777.9587, awang@gibsondunn.com)
*Alice Wang, a law clerk in the firm’s Washington, D.C. office, is not admitted to practice law.
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