Historically, the CFTC had allowed clients of an FCM to have a separate account that was walled off from other clients of the FCM. See . Eventually, the CFTC effectively prohibited the use of such accounts by denying that they would receive favorable treatment in insolvency. See . The CME proposal would, in effect, allow for the recreation of Interpretation 10, albeit in somewhat different legal form.

The extent to which significant regulatory risks are created by the regulators themselves is a point rarely mentioned in these annual reports. For example, the fragmentation of markets is a problem that is, if not created, at least exacerbated by the regulators. This is a result, in part, of arbitrary lines of jurisdiction that do not serve any policy purpose, but which survive because no part of the government is willing to sacrifice jurisdiction (and influence) to another.

The NASAA concern about CFDs should be reviewed. A CFD is either a futures contract or a swap. Futures contracts on foreign exchanges can be sold through CFTC-registered FCMs (but not through unregulated telemarketers). Similarly, swaps can be sold, but not to retail investors, and only subject to the CEA requirements.

The CFTC Letter follows a recent SEC no-action permitting broker-dealers to receive cash payments for research services from MiFID Managers without being subject to regulation as "investment advisers" under the Investment Advisers Act of 1940. However, the CFTC Letter is broader than the SEC Letter in two important respects. First, unlike the SEC Letter, the CFTC Letter permits firms to enter into separate research payment arrangements with any client, not only MiFID Managers. This enables…