CFTC Staff Letters

Staff of the Division of Clearing and Risk prepared guidance to DCOs in order to aid DCOs in revising and improving their Recovery Plans and Wind-down Plans, and in preparing proposed rule submissions to implement their Recovery Plans and Wind-down Plans.

Staff Advisory that reminds: (1) futures commission merchants (FCMs) and introducing brokers (IBs) of their obligations to report suspicious activities as required by a regulation issued by the Financial Crimes Enforcement Network under the Bank Secrecy Act; and (2) FCMs, IBs and all other persons registered or required to be registered with the Commission to comply with the economic sanctions programs imposed against countries and groups of individuals that appear at 31 C.F.R. Chapter V. Advisory.

Advisory to Futures Commission Merchants reminding them of key risk management program requirements and sharing observed examples of practices for implementing an effective program.

ISDA indicates that the industry should be able to review all swaps within 10 minutes after execution by May 1, 2016. Other industry participants have indicated that they should be able to do so by August 1, 2016. Therefore, the AQATP standard may be met if trades are routed to and received by the relevant DCO no more than 10 minutes after the execution of the trade, effective on August 1, 2016 and thereafter. Staff notes that the reporting obligations of SEFs and DCMs contained in Regulations 43 and 45 are not affected by this letter. In particular, a SEF or DCM must report a swap transaction to the appropriate Swap Data Repository as soon as technologically practicable after execution of the swap in accordance with Regulations 43.3 and 45.3 regardless of when the swap is submitted for clearing.Market participants should be aware that the positions taken herein do not excuse affected persons from compliance with any other applicable requirements of the CEA or the Commission’s regulations thereunder, in particular, the applicable swap data reporting requirements, clearing requirements, pre-execution credit check requirements, and straight-through processing requirements.

Proper reporting of swaps is an important obligation of SDs and MSPs. Firms should ensure that they have the systems and controls to properly report and to timely identify and correct any errors. Firms should periodically test their systems to ensure that the information is being properly transmitted. Further, any changes in systems that could have an effect on proper reporting should be tested and verified prior to any such changes.

Issuance of a temporary registration order as a swap execution facility to LedgerX LLC. (DMO)

The Division of Market Oversight is issuing Guidance to swap execution facilities regarding the calculation of projected operating costs or expenses for the purpose of meeting the financial resource requirements under SEF Core Principle 13 and Commission Regulation 37.1303 and clarifies that commissions paid employee-brokers, calculated as a percentage of transaction revenue, do not have to be included in the calculation.

Staff advisory from the Divisions of Market Oversight and Swap Dealer and Intermediary Oversight to remind futures commission merchants, clearing members, foreign brokers, swap dealers, and certain reporting markets of their obligation to obtain information on a timely basis from their customers or counterparties in order to comply with the ownership and control reports (OCR) final rule.

DSIO guidance to chief compliance officers of FCMs, SDs, and MSPs on how to comply with the requirement under Commission Regulation 3.3(e) to prepare an annual report.

Update: This letter has been replaced by letter 14-126.