2019-04297
Federal Register, Volume 84 Issue 47 (Monday, March 11, 2019)
[Federal Register Volume 84, Number 47 (Monday, March 11, 2019)]
[Notices]
[Pages 8671-8696]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-04297]
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COMMODITY FUTURES TRADING COMMISSION
Revised Registration Form 7-R
AGENCY: Commodity Futures Trading Commission.
ACTION: Notice of revised form.
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SUMMARY: The Commodity Futures Trading Commission (the ``Commission''
or ``CFTC'') is revising its Form 7-R, the application form that
entities must use to register with the Commission as a commodity pool
operator, commodity trading advisor, introducing broker, floor trader
firm, retail foreign exchange dealer, futures commission merchant,
leverage transaction merchant, swap dealer, or major swap participant
(collectively, ``applicants'').
DATES: Implementation date: The new, revised version of Form 7-R shall
be implemented (and the prior version shall be superseded) as of the
date upon which the National Futures Association (``NFA'') makes the
new, revised version
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of the Form 7-R available on the NFA website for use by applicants.
FOR FURTHER INFORMATION CONTACT: Matthew Kulkin, Director, 202-418-
5213, [email protected]; or Christopher Cummings, Special Counsel, 202-
418-5445, [email protected], Division of Swap Dealer and Intermediary
Oversight, Commodity Futures Trading Commission, 1155 21st Street NW,
Washington, DC 20581.
SUPPLEMENTARY INFORMATION:
I. Background
Entities that engage in certain specified business in the
derivatives markets regulated by the Commission are required to
register with the Commission by filing a completed Form 7-R with
NFA.\1\ These applicants include: Futures commission merchants, retail
foreign exchange dealers, introducing brokers, commodity trading
advisors, commodity pool operators, leverage transaction merchants,
swap dealers, major swap participants, and floor trader firms.\2\
Applicants have been required to use Form 7-R since 1977.\3\ In the
past, Form 7-R also was used to register with NFA and to apply for NFA
membership.
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\1\ 17 CFR 3.10(a)(2), 3.11(a), and 3.12(c).
\2\ 17 CFR 3.11(a); 3.12(c).
\3\ Revision of Registration Forms and Amendment of Related
Rules, 42 FR 23988 (May 11, 1977) (Form 7-R replaced Forms 1-R, 5-R
and 6-R).
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Form 7-R requests information about the applicant that can be used
to assess the applicant's fitness to engage in business in the
registration categories referenced above. Although Form 7-R is a
Commission form, it is maintained and used primarily by the NFA.\4\
Pursuant to section 17(o) of the Commodity Exchange Act (``Act''),\5\
Regulation 3.2,\6\ and a series of orders, the Commission delegated to
NFA certain registration functions including, among other things, the
processing of all Form 7-R filings.\7\ Since the first delegation to
NFA in 1983, NFA has developed substantial expertise in registration
matters, including reviewing and processing completed Forms 7-R. In
2002, with the approval of the Commission, NFA transitioned from a
paper-based registration system to an online registration system that
utilizes, among other things, an electronic version of Form 7-R.\8\
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\4\ NFA is currently the only registered futures association
authorized by the Commission in accordance with section 17 of the
Commodity Exchange Act.
\5\ 7 U.S.C. 21(o) (2012).
\6\ 17 CFR 3.2.
\7\ See, e.g., Introducing Brokers and Associated Persons of
Introducing Brokers; Authorization of National Futures Association
to Perform Commission Registration Functions, 48 FR 35158 (Aug. 3,
1983); Performance of Registration Functions by National Futures
Association, 49 FR 39593 (Oct. 9, 1984) (futures commission
merchants, commodity pool operators, commodity trading advisors, and
associated persons thereof); Performance of Registration Functions
by National Futures Association; Delegation of Authorities;
Performance of Registration Functions by National Futures
Association with Respect to Floor Traders and Floor Brokers, 58 FR
19657 (Apr. 15, 1993); and Performance of Registration Functions by
National Futures Association with Respect to Swap Dealers and Major
Swap Participants, 77 FR 2708 (Jan. 19, 2012).
\8\ Registration of Intermediaries, 67 FR 38869 (June 6, 2002).
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II. Revisions to Commission Form 7-R
NFA has requested that the Commission make several changes to Form
7-R.\9\ Upon consideration of NFA's request, the Commission is revising
and updating Form 7-R. In addition, the Commission is updating the Form
7-R Privacy Act and Paperwork Reduction Act Statements. The Form 7-R
revisions are described in this Notice.\10\
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\9\ Request from NFA to CFTC, dated March 23, 2018. This
communication is on file with the Commission.
\10\ This Notice describes the technical changes to Form 7-R.
The Commission also is making a number of minor, non-substantive
changes to Form 7-R that are not described herein.
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First, revised Form 7-R incorporates new functionality throughout
the form, consisting of hyperlinks to the text of the applicable
provisions of the Act, Commission regulations, and NFA Rules, whenever
those authorities are referenced in the form. Additionally, Form 7-R
incorporates certain clarifying language where appropriate. For
example, the term ``futures'' has been replaced with the term
``derivatives'' in several locations to more accurately reflect the
full scope of the Commission's jurisdiction. Similarly, the reference
to a failure ``to pay an award issued in a futures-related
arbitration'' was replaced with the phrase ``failure to pay an award
related to a CFTC-related product.''
In the section titled ``Location of Business Records,'' revised
Form 7-R no longer separately requests that non-U.S. applicants
identify the non-U.S. address where their business records are located.
Instead, both U.S. and non-U.S. applicants are required to comply only
with the existing requirements of Form 7-R to identify the location of
their business records, which remain unchanged, and, for non-U.S.
applicants, to indicate that such records will be produced for
inspection at NFA's offices, or at another physical location (not a
post office box) within the U.S. that the applicant identifies.
In the section titled ``Holding Company Information,'' the revised
Form 7-R requests additional information about any entity that is a
principal (as defined in Form 7-R) of the applicant. Form 7-R
previously required applicants to identify by name any entity that was
a principal of the applicant. The revised Form 7-R requires that, for
each entity that is principal of the applicant, the applicant must
provide the entity's Federal EIN and the location where the entity is
incorporated, organized, or established. This additional information is
intended to ensure accurate identification of the entity, given that
firms sometimes can have the same or similar names.
The sections in Form 7-R titled ``Disciplinary Information--
Criminal Disclosures,'' ``Disciplinary Information--Regulatory
Disclosures,'' and ``Disciplinary Information--Financial Disclosures''
contain a series of questions that inquire about the disciplinary
history of the applicant. These questions are designed to identify and
gather information that may reflect on the fitness of the applicant and
whether the applicant may be subject to a statutory disqualification
from registration.\11\ To this end, in the section titled
``Disciplinary Information--Regulatory Disclosures,'' a new question
was added to existing Question E. Among other things, Question E
inquires whether the applicant violated, or aided and abetted the
violation of, any investment-related statutes or regulations, a
potential statutory basis for refusing or conditioning
registration.\12\ The new question directs the applicant to disclose
whether it has ever been found to have ``failed to supervise another
person's activities under any investment-related statute or
regulation.'' \13\ The new question is intended to ensure complete
disclosure of conduct that may result in a refusal or limitation on
registration.
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\11\ See 7 U.S.C. 12(a) and (3) (2012).
\12\ 7 U.S.C. 12(a)(3).
\13\ See 7 U.S.C. 12(a)(3)(C).
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Separately, NFA is simplifying the process by which it requests
supplemental information and documentation regarding the applicant's
criminal, regulatory, or financial disclosures. The prior version of
Form 7-R requested that applicants provide a written explanation of the
facts and circumstances regarding any such disclosures. Applicants were
also separately requested to provide NFA with copies of pertinent
documents associated with each disclosure. To consolidate and modernize
this process, the revised Form 7-R allows applicants to complete a
separate ``Disclosure Matter Page'' for each matter, instance,
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or event requiring disclosure and to simultaneously upload all
pertinent documents associated with each disclosure. The Disclosure
Matter Page provides applicants with an efficient and effective method
of supplying the supplemental information and documentation that NFA
requests in the normal course whenever an applicant responds
affirmatively to any of the questions regarding criminal, regulatory or
financial disclosures.
Lastly, questions that pertain only to NFA membership have been
removed from the form. As noted above, in the past, Form 7-R functioned
both as a registration form for the Commission and NFA, and as an
application for NFA membership. To the extent that questions ask for
information that is necessary for NFA membership but is not necessary
for registration, those questions have been removed from the form and
will appear in a separate application for NFA membership. Specifically,
revised Form 7-R no longer contains: a series of questions that inquire
whether the applicant will transact in retail off-exchange foreign
currency, swap, futures, or options; a question that is directed to
applicants that are registering in multiple capacities that asks them
to select the capacity in which they intend to vote on NFA membership
matters; the question that asks applicants that are applying to
register as a futures commission merchant to indicate whether the
applicant has ``applied for membership at any United States commodity
exchange;'' a question that asks applicants that are applying for
registration as a swap dealer or major swap participant to indicate
whether the applicant is currently regulated by other U.S. regulators
and to identify those regulators; and lastly, contact information for
the applicant's Membership Contact, Accounting Contact, Assessment Fee
Contact, Arbitration Contact, Compliance Contact, or Chief Compliance
Officer Contact.
A revised version of Form 7-R that incorporates the changes
discussed in this Notice, as well as other minor, non-substantive
changes, is set forth in Appendix 2 to this Notice.
III. Related Matters
Paperwork Reduction Act
Recordkeeping or information collection requirements under the
Paperwork Reduction Act (``PRA'') related to Form 7-R exist under
current law. The titles for the existing information collections are
``Registration Under the Commodity Exchange Act,'' Office of Management
and Budget (``OMB'') control number 3038-0023, and ``Registration of
Swap Dealers and Major Swap Participants,'' OMB control number 3038-
0072. The preliminary view of the Commission is that the revisions to
Form 7-R may modify the existing recordkeeping or information
collection requirements under the PRA. To ensure compliance with the
PRA, the Commission, concurrently with this Notice, is publishing in
the Federal Register a separate notice and request for comment on the
amended PRA burden associated with the revised Form 7-R. The Commission
also will submit to OMB an information collection request to amend the
information collection, in accordance with 44 U.S.C. 3506(c)(2)(A) and
5 CFR 1320.8(d).
Issued in Washington, DC, on March 5, 2019, by the Commission.
Christopher Kirkpatrick,
Secretary of the Commission.
Appendices to Notice of Revised Form--Commission Voting Summary and
Revised Registration Form 7-R
Appendix 1--Commission Voting Summary
On this matter, Chairman Giancarlo and Commissioners Quintenz,
Behnam, Stump, and Berkovitz voted in the affirmative. No
Commissioner voted in the negative.
Appendix 2--Revised Registration Form 7-R
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[FR Doc. 2019-04297 Filed 3-8-19; 8:45 am]
BILLING CODE 6351-01-C