Federal Register, Volume 77 Issue 12 (Thursday, January 19, 2012)[Federal Register Volume 77, Number 12 (Thursday, January 19, 2012)]
[Notices]
[Pages 2708-2709]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-791]
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COMMODITY FUTURES TRADING COMMISSION
Performance of Registration Functions by National Futures
Association With Respect To Swap Dealers and Major Swap Participants
AGENCY: Commodity Futures Trading Commission.
ACTION: Notice and Order.
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SUMMARY: The Commodity Futures Trading Commission (Commission) is
authorizing the National Futures Association (NFA), effective January
19, 2012, in accordance with the standards established by the Commodity
Exchange Act (CEA) and the Commission's regulations issued thereunder,
to take the following actions: To process and grant applications for
registration and withdrawals of registration with respect to swap
dealers (SDs) and major swap participants (MSPs), and to notify of
provisional registration; to confirm initial compliance with
requirements applicable to SDs and MSPs under CEA Section 4s; to
conduct proceedings to deny, condition, suspend, restrict or revoke the
registration of any SD or MSP or of any applicant for registration in
either category; to maintain records regarding SDs and MSPs; and to
serve as the official custodian of those Commission records.
DATES: Effective date: January 19, 2012.
FOR FURTHER INFORMATION CONTACT: Barbara S. Gold, Associate Director,
Christopher W. Cummings, Special Counsel, or Elizabeth Miller,
Attorney-Advisor, Division of Swap Dealer and Intermediary Oversight,
1155 21st Street NW., Washington, DC 20581. Telephone Number: (202)
418-6700 and electronic mail: [email protected], [email protected], or
SUPPLEMENTARY INFORMATION
I. Authority and Background
In a separate document published elsewhere in today's Federal
Register, the Commission is issuing final regulations regarding the
registration process for SDs and MSPs. These final regulations follow
the publication of proposed regulations on November 23, 2010,\1\ and
they implement the registration requirements for SDs and MSPs set forth
in the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-
Frank Act).\2\ Specifically, Section 731 of the Dodd-Frank Act added
Sections 4s(a) and 4s(b) to the CEA \3\ to provide for the registration
of SDs and MSPs in pertinent part as follows:
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\1\ 75 FR 71379.
\2\ Public Law 111-203, 124 Stat. 1376 (2010). The text of the
Dodd-Frank Act may be accessed through the Commission's Web site,
http://www.cftc.gov.
\3\ The CEA and the Commission's regulations issued thereunder
similarly may be accessed through the Commission's Web site.
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(a) REGISTRATION.--
(1) SWAP DEALERS.--It shall be unlawful for any person to act as a
swap dealer unless the person is registered as a swap dealer with the
Commission.
(2) MAJOR SWAP PARTICIPANTS.--It shall be unlawful for any person
to act as a major swap participant unless the person is registered as a
major swap participant with the Commission.
(b) REQUIREMENTS.--
(1) IN GENERAL.--A person shall register as a swap dealer or major
swap participant by filing a registration application with the
Commission.
(2) CONTENTS.--
(A). IN GENERAL.--The application shall be made in such form and
manner as prescribed by the Commission, and shall contain such
information, as the Commission considers necessary concerning the
business in which the applicant is or will be engaged.
Pursuant to CEA Sections 4s(a) and 4s(b), then, the Commission is today
issuing Regulations 23.21(a) and 23.21(b), which respectively subject
each person who meets the definition of an SD or MSP to the
registration provisions under the CEA and to Part 3 of the Commission's
regulations.\4\
[[Page 2709]]
Additionally, pursuant to CEA Sections 4p, 8a and 17, the Commission is
issuing Regulation 170.16, which provides that each registered SD or
MSP must become and remain a member of an RFA.
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\4\ Regulation 23.21(c) makes clear that each affiliate of an
insured depository institution described in Dodd-Frank Act Section
716(c) is subject to the registration provisions under the CEA and
Part 3 of the regulations as an SD, if the affiliate is an SD, or as
an MSP, if the affiliate is an MSP.
The Commission also is issuing today such amendments to Part 3
of its regulations as may be necessary to accommodate the
registration of SDs and MSPs thereunder.
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CEA Section 4s further directs the Commission to adopt regulations
applicable to SDs and MSPs with respect to the following areas: Capital
and margin, reporting and recordkeeping, daily trading records,
business conduct standards, documentation standards, duties, chief
compliance officer,\5\ and, with respect to uncleared swaps,
segregation.\6\
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\5\ Sections 4s(e) through 4s(k), respectively, added to the CEA
by Dodd-Frank Act Section 731.
\6\ Section 4s(l), added to the CEA by Dodd-Frank Act Section
724(c).
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CEA Section 8a(10) provides that the Commission may authorize any
person--including an RFA--to perform any of the registration functions
under the CEA. Further, CEA Section 17(o) provides that the Commission
may require an RFA to perform registration functions under the CEA with
respect to its members.\7\ The Commission has previously authorized NFA
to perform the full range of registration functions with regard to
applicants for and persons registered as: A futures commission
merchant, commodity pool operator or commodity trading advisor; \8\ an
introducing broker; \9\ a leverage transaction merchant; \10\ a floor
broker; \11\ a floor trader; \12\ or a retail foreign exchange
dealer.\13\ By today's Order, the Commission is authorizing NFA, in
accordance with the standards established by the CEA and the
Commission's regulations issued thereunder,\14\ to perform the full
range of registration functions under the CEA and the Commission's
regulations with regard to SDs and MSPs. It is also authorizing NFA to
notify an applicant for registration as an SD or an MSP that it is
provisionally registered, and to confirm the applicant's initial
compliance with such regulations as the Commission may adopt to
implement the requirements for SDs and MSPs in CEA Sections 4s(e)
through 4s(l).
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\7\ Section 17(o)(1) excepts from this authority a member who is
a ``registered entity.'' CEA Section 1a(40) defines this term to
include, among other persons, a board of trade designated as a
contract market under CEA Section 5 and a swap execution facility
registered under CEA Section 5h.
Although CEA Section 17 provides that `[a]ny association of
persons may be registered with the Commission as a registered
futures association,'' to date, NFA is the sole association that has
applied for and has been granted registration as a futures
association with the Commission.
\8\ See 49 FR 39593 (Oct. 9, 1984).
\9\ See 48 FR 35158 (Aug. 3, 1983).
\10\ See 54 FR 19556 (May 8, 1989).
\11\ See 51 FR 34490 (Sep. 29, 1986).
\12\ See 58 FR 19657 (Apr. 15, 1993).
\13\ See 75 FR 55310 (Sep. 10, 2010).
\14\ See, e.g., 49 FR 8208 (Mar. 5, 1984), whereby, among other
things, the Commission: Amended Part 3 of its regulations, which
concerns registration under the CEA, by adopting a new Subpart C to
provide for denial, suspension or revocation of registration; and
amended Appendix A to Part 3, to provide for interpretative advice
with respect to statutory disqualification under CEA Sections
8a(2)(C) and 8a(2)(E) and Sections 8a(3)(J) and 8a(3)(M).
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The Commission further notes that it has, by prior Orders,
authorized NFA to maintain various Commission registration records, and
has certified NFA as the official custodian of such records for the
Commission.\15\ The Commission has determined, in accordance with its
authority under Section 8a(10) of the Act, to authorize NFA to maintain
and serve as the official custodian of the Commission's registration
records with respect to SDs and MSPs.
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\15\ See, e.g., 49 FR 39593 (Oct. 9, 1984) (regarding the
registration records of futures commission merchants, commodity pool
operators and commodity trading advisors), and 75 FR 55310 (Sep. 10,
2010) (regarding the registration records of retail foreign exchange
dealers).
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In maintaining the Commission's registration records pursuant to
this Order, NFA shall remain subject to all other requirements and
obligations imposed upon it by the Commission in existing or future
Orders or regulations. In this regard, NFA shall also implement such
additional procedures and shall modify existing procedures as are
necessary to ensure the security and integrity of these records as may
be acceptable to the Commission; to facilitate prompt access to these
records by the Commission and its staff; to facilitate disclosure of
public or nonpublic information in these records when permitted by
Commission Orders or regulations; to keep logs as required by the
Commission concerning disclosures of nonpublic information; and
otherwise to safeguard the confidentiality of the records.
II. Conclusion and Order
The Commission has determined, pursuant to the provisions of CEA
Sections 8a(10) and 17(o), to authorize NFA, effective January 19,
2012, to perform the following registration functions:
(1) To process and grant applications for registration and
withdrawals from registration of swap dealers (SDs) and major swap
participants (MSPs), and to notify of provisional registration;
(2) In connection with processing and granting applications for
registration of SDs and MSPs, to confirm initial compliance with such
regulations as the Commission may adopt to implement CEA Sections 4s(e)
through 4s(k) and, where applicable, CEA Section 4s(l);
(3) To conduct proceedings to deny, condition, suspend, restrict or
revoke the registration of any SD or MSP or of any applicant for
registration in either category; and
(4) To maintain records regarding SDs and MSPs, and to serve as the
official custodian of those Commission records.
NFA shall perform these functions in accordance with the standards
established by the CEA and the Commission's regulations issued
thereunder. NFA shall follow the same procedures with respect to
recordkeeping, disclosure and tracking of fitness investigations and
adverse action proceedings concerning SDs and MSPs as it must follow in
cases involving other registrants.
These determinations are based upon the Congressional intent
expressed in CEA Sections 4s(a), 4s(b), 8a(10), and 17(o). This Order
does not, however, authorize NFA to accept or act upon requests for
exemption from registration, or to render ``no-action'' or
interpretative letters with respect to applicable registration
requirements.
Nothing in this Order, or in CEA Section 8a(10) or 17(o), shall
affect the Commission's authority to review the performance by NFA of
Commission registration functions, to adopt and enforce regulations
applicable to SDs and MSPs as Commission registrants, and to conduct
on-site examinations of the operations and activities of SDs and MSPs
as Commission registrants.
Issued in Washington, DC, on January 11, 2012.
David A. Stawick,
Secretary of the Commission.
Appendices to Performance of Registration Functions by National Futures
Association With Respect to Swap Dealers and Major Swap Participants--
Commission Voting Summary and Statements of Commissioners
Note: The following appendices will not appear in the Code of
Federal Regulations
Appendix 1--Commission Voting Summary
On this matter, Chairman Gensler and Commissioners Sommers,
Chilton, O'Malia and Wetjen voted in the affirmative; no
Commissioner voted in the negative.
[FR Doc. 2012-791 Filed 1-18-12; 8:45 am]
BILLING CODE P
Last Updated: January 19, 2012