Category: 3. Business

Client Alert  |  December 12, 2025

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From the Derivatives Practice Group: This week, the CFTC was especially active, issuing several no-action letters, including to designated contract markets and derivatives clearing organizations regarding event contracts and in response to a request from ISDA regarding Part 43 and Part 45 requirements.

New Developments

Acting Chairman Pham Announces Implementation of U.S. Treasury Market Reforms. On December 12, CFTC Acting Chaiman Pham announced the CFTC had approved a proposed order to grant a limited exemption necessary for the Chicago Mercantile Exchange Inc. and the Fixed Income Clearing Corporation to make their existing cross-margining arrangement available to certain customers with appropriate safeguards. [NEW]

U.S. Senate Passes Procedural Vote for Mike Selig, Paving the Way for a Final Vote in the Senate. On December 11, the Senate voted 52-47 to approve a resolution that sets up the final vote for Mike Selig’s confirmation as CFTC Chairman. [NEW]

CFTC Staff Issues No-Action Letters Regarding Event Contracts. On December 11, the CFTC’s Division of Market Oversight and Division of Clearing and Risk announced they have taken a no-action position regarding swap data reporting and recordkeeping regulations in response to requests from multiple registered entities, including designated contract markets and derivatives clearing organizations. According to the announcement, the Divisions will not recommend the CFTC initiate an enforcement action against certain registered entities 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 the registered entities, subject to the terms of the no-action letters. [NEW]

CFTC Staff Issues No-Action Position Relating to Designated Contract Market Procedures. On December 11, the CFTC’s Division of Market Oversight announced it has issued a no-action letter to Small Exchange Inc., a designated contract market, which addresses certain procedures related to dormancy. The no-action position is time-limited and subject to the terms and conditions in the Division’s no-action letter. [NEW]

Acting Chairman Pham Announces Withdrawal of “Outdated” Digital Assets Guidance. On December 11, CFTC Acting Chairman Pham announced that the CFTC will withdraw “outdated” guidance related to actual delivery of “virtual currencies,” given the substantial developments in crypto asset markets. The CFTC said that the withdrawal of the guidance will enable the CFTC to continue its ongoing work to implement the recommendations in the President’s Working Group on Digital Asset Markets report. [NEW]

CFTC Staff Issues No-Action Letter Regarding Part 43 and Part 45 Requirements. On December 11, the CFTC’s Division of Market Oversight took a no-action position in response to a request from the International Swaps and Derivatives Association regarding certain data requirements under Part 43 and Part 45 of the CFTC’s regulations to reduce unnecessary and excessive regulatory burden and associated costs. [NEW]

Acting Chairman Pham Announces CEO Innovation Council Participants. On December 10, CFTC Acting Chairman Pham announced the first round of CEO Innovation Council participants, representing exchanges. The CFTC said that the CEO Innovation Council will engage in public discussion of market structure developments in derivatives markets and that further information on the CEO Innovation Council will be released once details are finalized. [NEW]

Acting Chairman Pham Announces Regulatory Clarity for U.S. Access to Markets. On December 9, CFTC Acting Chairman Pham announced that the CFTC’s Market Participants Division, Division of Clearing and Risk, and Division of Market Oversight issued a no-action letter to harmonize three separate definitions of “U.S. person,” among other things, under the CFTC’s Dodd-Frank Act cross-border swap framework. According to the CFTC, the letter simplified and consolidated existing no-action positions that address almost 15 years of regulatory uncertainty and promotes harmonization with SEC regulations. [NEW]

CFTC to Accelerate Publication of Backlogged COT Data. On December 9, the CFTC announced that it is accelerating the publication of Commitments of Traders reports that were interrupted during the lapse in federal appropriation. According to the CFTC, the revised timeline will eliminate the report backlog by December 29, 2025. [NEW]

Acting Chairman Pham Announces Launch of Digital Assets Pilot Program for Tokenized Collateral in Derivatives Markets. On December 8, CFTC Chairman Pham announced the launch of a digital assets pilot program for certain digital assets, including BTC, ETH, and USDC, to be used as collateral in derivatives markets; guidance on tokenized collateral; and withdrawal of outdated requirements given the enactment of the GENIUS Act. The CFTC said that the announcement follows the tokenized collateral initiative Acting Chairman Pham launched in September as a part of the CFTC’s Crypto Sprint to implement recommendations in the President’s Working Group on Digital Asset Markets report. [NEW]

Acting Chairman Pham Announces First-Ever Listed Spot Crypto Trading on U.S. Regulated Exchanges. On December 4, Chairman Caroline D. Pham announced that listed spot cryptocurrency products will begin trading for the first time in U.S. federally regulated markets on CFTC registered futures exchanges. This announcement follows recommendations by the President’s Working Group on Digital Asset Markets and stakeholder insights from the CFTC’s Crypto Sprint and cooperative engagement with the Securities and Exchange Commission. The Crypto Sprint also launched public consultations on all other recommendations from the President’s Working Group report relevant to the CFTC.

Acting Chairman Pham Announces Reforms to Wells Process, and Amendments to the Rules of Practice and the Rules Relating to Investigations. On December 1, Chairman Caroline D. Pham announced the Commission is amending its Rules of Practice and its Rules Relating to Investigations. The amended Rules of Practice seek to enhance the transparency of the Commission’s enforcement actions, including changes to ensure an accurate and complete administrative record by improving internal memoranda to the Commission when the Division of Enforcement recommends an enforcement action.

New Developments Outside the U.S.

ESMA Appoints Marie-Anne Barbat-Layani and Christopher P. Buttigieg as the New Members of its Management Board and Renews Armi Taipale’s Mandate. On December 11, ESMA appointed Marie-Anne Barbat-Layani of Autorité Des Marchés Financiers (France) and Christopher P. Buttigieg of Financial Services Authority (Malta), as the new members of its Management Board. The Board of Supervisors has reappointed Armi Taipale of Finanssivalvonta (Finland), for a second mandate. [NEW]

ESMA Chair Verena Ross to Step Down at the End of Her Current Term. On December 10, ESMA announced that its Chair, Verena Ross, has decided to not renew her term as Chair for a second mandate. According to ESMA, she will continue her work as ESMA’s Chair until the end of her contract on October 31, 2026. ESMA said that it will now launch the process for selecting a new Chair. [NEW]

ESMA Announces Supervisory Expectations for the Management Body in the Form of 12 High Level Principles. On December 10, ESMA published its Final Report on the Supervisory Expectations for the Management Body, outlining ESMA’s expectations for the management bodies of the entities under its supervision. ESMA said that the 12 high-level principles are directed at entities supervised by ESMA and those looking to obtain an ESMA license, and are designed to set out ESMA’s core expectations in the form of outcomes. [NEW]

ESMA Welcomes Commission’s Ambitious Proposal on Market Integration. On December 4, ESMA announced that it welcomes the European Commission’s legislative proposal on market integration and supervision. According to ESMA, the package represents a major step towards deeper and more efficient EU capital markets and reflects many of the recommendations set out in ESMA’s 2024 Position Paper on building more effective and attractive capital markets in the EU.

ESMA to Launch Common Supervisory Action on MiFID II Conflicts of Interest Requirements. On December 2, ESMA announced that it will launch a Common Supervisory Action (CSA) with National Competent Authorities on conflicts of interest in the distribution of financial instruments. The CSA will assess how firms comply with their obligations under MiFID II to identify, prevent, and manage conflicts of interest when offering investment products to retail clients.

New Industry-Led Developments

Global Standard-Setting Bodies Publish Assessment of Margin Requirements for Non-Centrally Cleared Derivatives. On December 12, the Basel Committee on Banking Supervision (BCBS) and the International Organization of Securities Commissions (IOSCO) published a report that reviews the implementation of margin requirements for non-centrally cleared derivatives. IOSCO said the report concluded that the framework has been effectively implemented and finds no evidence of material issues. The BCBS-IOSCO Working Group on Margining Requirements recommended ongoing monitoring through supervisory information exchange and the sharing of experiences among member authorities. [NEW]

ISDA Responds to Bank of England on Gilt Market Resilience. On December 5, ISDA responded to the Bank of England’s discussion paper on gilt market resilience. In the response, ISDA encourages the Bank of England, before introducing any significant policy changes that would affect the functioning of the gilt repo market, to consider the prudential requirements on capital and liquidity in relation to repo transactions, in conjunction with monetary policy and financial stability, to avoid unintended and detrimental consequences for the UK gilt market and firms’ risk management practices.

ISDA Publishes Note on Determining Initial Reference Index for New Trades referencing CPI-U. On November 25, ISDA published a Market Practice Note to recommend a specific methodology that market participants could elect to use for the purposes of determining the Initial Reference Index for certain new inflation derivative transactions given that the Bureau of Labor Statistics has confirmed it will not publish the October 2025 level of the “USA – Non-revised index of Consumer Prices for All Urban Consumers (CPI-U)” as defined in the 2008 ISDA Inflation Derivatives Definitions.

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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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KARACHI:

The Pakistan Stock Exchange (PSX) staged a strong rebound on Friday as it surged nearly 1,300 points, led by investor interest in attractive stocks of fertiliser, bank, technology and energy sectors.

The benchmark KSE-100 index rose to the record high of 169,865 following a two-day breather, but it fell short of the 170k milestone at the close of trading. The market reached 170,053 in intra-day trading, however, it again could not hold the level and dropped just before the end of the session.

Earlier, at the commencement of trading, the index immediately dipped to the intra-day low of 168,422 and thereafter it made a gradual recovery by erasing all the losses. At close, the KSE-100 index recorded an increase of 1,289.83 points, or 0.77%, to settle at 169,864.53.

According to analysts, on a week-on-week basis, the index gained 1.66%, which could be attributed to the approval of $1.2 billion in loans by the International Monetary Fund (IMF) and the power-sector debt settlement of Rs659.6 billion.

In its daily review, Topline Securities said that the KSE-100 index rebounded on Friday as it largely traded in the positive zone and closed at 169,865 (up 0.77%). Top positive contribution to the index came from Fauji Fertiliser Company, MCB Bank, Systems Limited, Maple Leaf Cement, Pakistan Petroleum, Engro Fertilisers and Hubco as they cumulatively contributed 962 points.

Traded value-wise, Nishat Mills (Rs3 billion), Pakistan Petroleum (Rs2.17 billion), Sui Southern Gas Company (Rs1.28 billion), Maple Leaf Cement (Rs1.25 billion), Meezan Bank (Rs1.24 billion), Fauji Fertiliser Company (Rs1.2 billion) and OGDC (Rs1.16 billion) dominated the activity, Topline said.

In its weekly report, the brokerage house said that the KSE-100 gained 1.66% week-on-week. “This gain can be attributed to news that the IMF board approved a $1.2 billion loan by granting waivers for missing a few core conditions, and the landmark Rs659.6 billion power-sector debt settlement.”

Mubashir Anis Naviwala of JS Global said that the PSX rebounded strongly as the KSE-100 index surged 1,290 points to close at 169,865.

The market opened soft but quickly recovered with a steady upward momentum. It touched the intra-day high at 170,053, showing strong buying interest, he said.

Overall volumes remained healthy at 873 million shares as optimism returned after Thursday’s pullback, lifting major sectors. Buyers remained dominant throughout the session, driving sustained strength. “The near-term outlook stays positive as the market attempts another break above 170k,” he added.

Overall trading volumes stood at 873 million shares compared to the previous tally of 1.3 billion. The value of traded shares stood at Rs40.9 billion.

On the ready market, shares of 482 companies were traded. Of these, 259 closed higher, 180 dipped and 43 remained unchanged.

Hum Network was the volume leader with trading in 71.8 million shares, rising Rs0.23 to close at Rs14.88. It was followed by Dost Steels with 47 million shares, gaining Rs0.22 to close at Rs8.14 and WorldCall Telecom with 40.8 million shares, up Rs0.04 to close at Rs1.83.

Foreign investors were net sellers of shares worth Rs547.5 million, the National Clearing Company reported.

So what has caused the price of cocoa and milk to shoot up?

Extreme weather caused by climate change has hit cocoa farmers’ crop yields in Africa, says Ghadafi Razak, an academic at Warwick Business School.

Extreme rainfall in India, Brazil and Thailand in 2023, followed by droughts the following year have meant poor harvests in those countries too, pushing up prices.

The extra costs take time to feed through to customers, says Christian Jaccarini, a senior food analyst at the Energy & Climate Intelligence Unit think tank, which means those extra costs are hitting shop shelves now.

“It takes about 18 months for the impact of a shock to be felt by consumers, so we still have quite a long time with higher prices for chocolate,” he said.

Milk prices have shot up too. Diarmaid Mac Colgáin, founder of the Concept Dairy consultancy blames the rising cost of feed, fuel and fertilisers as well as farmers facing higher wage bills and production costs.

He says some brands have substituted palm oil and shea oil for some of the milk to make up the fat content of their chocolate.

KARACHI:

Pakistan’s Sensitive Price Index (SPI) for the week ended December 11, 2025, registered a year-on-year increase of 3.90%, reflecting persistent inflationary pressures on essential commodities despite a marginal weekly decline of 0.03%, according to the latest data from the Pakistan Bureau of Statistics (PBS).

The combined SPI, based on 2015-16=100 and tracking 51 essential items across 50 markets in 17 cities, stood at 335.73 points, down from 335.84 points the previous week. This slight easing offers tentative relief to households grappling with elevated costs, particularly in urban centres where food and energy prices dominate expenditure baskets. However, the YoY uptick underscores broader economic challenges, including supply chain disruptions and fiscal adjustments, with sugar and gas charges emerging as key drivers.

Week-on-week, prices of 12 items (23.53%) rose, 10 (19.61%) fell, and 29 (56.86%) remained stable. The sharpest declines were in tomatoes (-16.18%), sugar (-4.91%), onions (-4.08%), and potatoes (-1.71%), alleviating some food bill burdens for lower-income groups. Conversely, chicken surged 6.19% amid seasonal demand, followed by wheat flour (2.88%) and eggs (0.93%), signalling volatility in protein and staple categories. Cooking oil (5 litres) and vegetable ghee (2.5 kg) edged up 0.72% and 0.70%, respectively, while tea prepared and powdered milk saw modest gains of 0.56% and 0.39%.

On a YoY basis, the 3.90% rise was fuelled by sugar (30.28%), gas charges for Q1 (29.85%), wheat flour (21.59%), and gur (14.96%), highlighting sustained hikes in sweeteners and utilities. Beef climbed 13.42%, firewood 12.86%, and diesel 8.42%, exacerbating transport and heating costs. Positive offsets included potatoes (-42.59%), tomatoes (-40.75%), garlic (-37.46%), and onions (-30.23%), with pulse gram dropping 28.95% due to improved harvests.

Disparities across consumption quintiles paint a nuanced picture: the lowest-income group (Q1, up to Rs17,732 monthly) faced a steeper YoY decline of 0.26% but a milder YoY rise of 3.01%, compared to Q5 (above Rs44,175), which saw a 0.02% WoW gain and 3.47% YoY increase. Overall, Q3 posted the highest YoY at 4.08%, underscoring regressive impacts on middle-class budgets.

Historical trends reveal moderation: the combined SPI has eased from a 4.00% YoY in early December to 3.90%, down from peaks above 5% in October. Quarterly data for Q4 2025-26 shows Q1 SPI at 317.38, up 5.68% QoQ but only 2.08% YoY, suggesting stabilising rural-urban dynamics.

Economists view the dip as a welcome breather, potentially signalling harvest gluts in perishables, but warn of upside risks from global commodity volatility and impending energy tariff revisions.