Division of Swap Dealer and Intermediary Oversight

CFTC Issues Advisory Regarding Chief Compliance Officer Annual Report Requirements

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On December 4, the CFTC issued an advisory (Staff Advisory 19-24) providing further guidance on certain requirements applicable to swap dealers, futures commission merchants and major swap participants (collectively, Registrants) in connection with the preparation and submission of chief compliance officer annual compliance reports (CCO Annual Reports) pursuant to CFTC Regulation 3.3. The CFTC had previously issued: (i) a final rule governing CCO Annual Reports in 2012; (ii) a related staff advisory in 2014; (iii) a final rule modifying certain regulations related to the CCO Annual Report requirements in December 2018; and (iv) guidance focused on certain of those requirements in December 2018.

After reviewing CCO Annual Reports submitted for the 2018 fiscal year, the Division of Swap Dealer and Intermediary Oversight (DSIO) of the CFTC issued Staff Advisory 19-24 to provide additional guidance to Registrants regarding the CCO Annual Report requirements. Staff Advisory 19-24 addresses the following areas of the CCO Annual Report: (i) areas for improvement; (ii) financial, managerial, operational, and staffing resources; (iii) material non-compliance issues; (iv) furnishing the annual report and related matters; (v) the certification requirement; (vi) compliance with the Volcker Rule; and (vii) other miscellaneous items. The Advisory also notes that, if a Registrant files a CCO Annual Report that DSIO staff determines is noncompliant, the Registrant may be required to file a corrected CCO Annual Report pursuant to CFTC Regulation 3.3(f)(4). Release.

CFTC Issues No-Action Letter to Swap Dealers to Extend Collateral Rule Deadline due to Limitations with Custodial Accounts

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On September 1, 2016, the U.S. Commodity Futures Trading Commission’s (“CFTC”) Division of Swap Dealer and Intermediary Oversight announced that it “issued a time-limited, no-action letter stating that it will not recommend an enforcement action against a swap dealer subject to the September 1, 2016 compliance date for the CFTC’s uncleared swap margin rules, subject to certain conditions, for failing to fully comply with the custodial arrangement requirements of CFTC regulation 23.157 prior to October 3, 2016.” Press release.

CFTC Announces Actions Addressing Application of the Dodd-Frank Act to Cross-Border Transactions

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On August 4, 2016, the U.S. Commodity Futures Trading Commission (CFTC) announced two separate actions relating to the application of the Dodd-Frank Act to cross-border transactions. The CFTC issued a Final Response to District Court Remand Order in Securities Industry and Financial Markets Association, et al. v. United States Commodity Futures Trading Commission that explains the CFTC’s approach to application of swaps regulations internationally. The CFTC’s Divisions of Swap Dealer and Intermediary Oversight (DSIO), Clearing and Risk, and Market Oversight (Divisions) also issued a no-action letter that extends relief to swap dealers registered with the CFTC from certain transaction-level requirements under the Commodity Exchange Act. Press Release.

CFTC Issues No-Action Relief to Certain Introducing Brokers

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On January 23, 2015 the CFTC Division of Swap Dealer and Intermediary Oversight issued no-action relief to certain introducing brokers (IBs) with respect to net capital and financial reporting requirements under Commission Regulations 1.10 and 1.17, respectively.  The conditioned relief permits foreign-domiciled IBs to file audited and unaudited form 1-FR-IBs, as applicable, using local accounting principles in effect where the IB is domiciled in lieu of U.S. Generally Accepted Accounting Principles or International Financial Reporting Standards. In addition, eligible foreign-domiciled IBs will not be required to apply certain foreign currency capital charges under Regulation 1.17 and staff guidance.  Release.

CFTC No-Action Relief for CPO Registration of Family Offices

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On November 30, the CFTC issued a no-action letter stating that the Division of Swap Dealer and Intermediary Oversight will not take enforcement action against the operators of family offices for failure to register as commodity pool operators. CFTC Release. CFTC No-Action Letter.

CFTC No-Action Relief for CPO Registration of Fund of Funds

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On November 30, the CFTC issued a time limited no-action letter stating that that the Division of Swap Dealer and Intermediary Oversight will not take enforcement action against the commodity pool operator of a fund of funds for failure to register as such until the later of June 30, 2013, or six months after the effective date (or compliance date, if later) of any revised guidance on the de minimus threshold rules. CFTC Release. CFTC No-Action Letter.

CFTC No-Action Relief for CPO Registration of Business Development Companies

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On December 4, the CFTC issued a no-action letter stating that the Division of Swap Dealer and Intermediary Oversight will not take enforcement action against operators of business development companies for failure to register as commodity pool operators.　　CFTC Release.  CFTC No-Action Letter.