Recent developments discussed by the authors include CFTC and NFA feedback on CCO annual reports, NFA examinations of CCO programs, and CFTC's enforcement action against a non-U.S. swap dealer located in the EU. They also address CFTC's extension of CCO's duties to include Volcker rule compliance. The authors find that both CFTC and NFA have engaged in constructive dialogue with swap dealers on important matters, but that two significant issues remain: substituted compliance and CCO duties under the Volcker Rule.
The swap dealer requirements under the Dodd-Frank Act1 and the Commodity Futures Trading Commission's ("CFTC's" or "Commission's") implementing regulations have been in effect now for just over three years. Since December 2012, entities meeting the definition of "swap dealer" have been required to submit applications to the CFTC for registration as swap dealers and conduct their swap activities in accordance with the CFTC's regulatory regime for swaps and swap dealers. Among the requirements for swap dealers is that each swap dealer designate an individual to serve as its Chief Compliance Officer ("CCO"), whose responsibilities include ensuring that the swap dealer complies with the swap requirements of the Commodity Exchange Act ("CEA") and Commission regulations. The CCO also must establish and follow procedures for the remediation of any non-compliance issues.2 In addition, the CCO must prepare and submit to the Commission an annual report that describes each policy and procedure of the swap dealer, and the compliance of the swap dealer with the CEA and Commission regulations.3
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Originally published by The Review of Securities & Commodities Regulation, February 24, 2016.
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