Internal Business Conduct Standards (Risk Management, Recordkeeping and CCOs)
The Commodity Futures Trading Commission (Commission) adopted regulations to implement certain provisions of Title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act. These regulations set forth reporting and recordkeeping requirements and daily trading records requirements for swap dealers (SDs) and major swap participants (MSPs). These regulations also set forth certain duties imposed upon SDs and MSPs registered with the Commission with regard to: Risk management procedures; monitoring of trading to prevent violations of applicable position limits; diligent supervision; business continuity and disaster recovery; disclosure and the ability of regulators to obtain general information; and antitrust considerations. In addition, these regulations establish conflicts-of-interest requirements for SDs, MSPs, futures commission merchants (FCMs), and introducing brokers (IBs) with regard to firewalls between research and trading and between clearing and trading. Finally, these regulations also require each FCM, SD, and MSP to designate a chief compliance officer, prescribe qualifications and duties of the chief compliance officer, and require that the chief compliance officer prepare, certify, and furnish to the Commission an annual report containing an assessment of the registrant's compliance activities.
23.200 through 23.205 (Reporting, Recordkeeping, and Daily Trading Records Requirements for SDs and MSPs): Compliance is required as of the date on which SDs and MSPs are required to apply for registration pursuant to § 3.10. Compliance with the following provision is deferred until May 1, 2013: § 23.201(b)(3)(ii)
The Division of Swap Dealer and Intermediary Oversight has provided no-action relief that defers compliance with the following requirements until March 31, 2013: (i) the requirement that SDs and MSPs make and keep records of all oral communications related to pre-execution swap trade information (and communications that lead to the conclusion of a related cash or forward transaction) pursuant to Regulations 23.202(a) and (b), (ii) the requirement that SDs and MSPs maintain all transaction records and daily trading records in a manner “identifiable and searchable” by transaction and counterparty pursuant to Regulations 23.201(a)(1), 23.202(a) and 23.202(b), (iii) the requirement that SDs and MSPs use a UTC timestamp when recording quotations prior to and at the time of execution of a swap pursuant to Regulations 23.202(a)(1)(ii), (a)(2)(iv), (b)(3) and (b)(4), and (iv) the requirement that SDs and MSPs retain swap records at their principal places of business or such other principal offices as designated by the SDs or MSPs. (see CFTC Staff Letter 12-29 PDF Image). Also see 78 FR 17 PDF Image.
23.600 (Risk Management Program for SDs and MSPs), § 23.601 (Monitoring of Position Limits), § 23.602 (Diligent Supervision), § 23.603 (Business Continuity and Disaster Recovery), § 23.605 (Conflicts of Interest Policies and Procedures), § 23.606 (General Information: Availability for Disclosure and Inspection), and § 23.607 (Antitrust Considerations): Compliance is required as of the date on which SDs and MSPs are required to apply for registration pursuant to § 3.10.77
1.71 (Conflicts of Interest Policies and Procedures by FCMs and IBs): FCMs and IBs registered with CFTC as of 6/4/12 must comply by 6/4/12, except that such FCMs need not comply with § 1.71(d) until the date on which SDs and MSPs are required to apply for registration pursuant to § 3.10. FCMs and IBs not registered with CFTC as of 6/4/12 must comply upon registration with the CFTC, except that such FCMs need not comply with § 1.71(d) until the date on which SDs and MSPs are required to apply for registration pursuant to § 3.10. The Division of Swap Dealer and Intermediary Oversight provided no-action relief that deferred compliance with §§ 1.71(a)-(c), (e) and (f) until August 3, 2012 (see CFTC Staff Letter 12-26 PDF Image.
3.3 (Chief Compliance Officer – FCMs, SDs, and MSPs): SDs and MSPs currently regulated by U.S. prudential regulator or registered with SEC: Compliance is required as of the date on which SDs and MSPs are required to apply for registration pursuant to § 3.10. SDs and MSPs not currently regulated by U.S. prudential regulator and not registered with SEC: Compliance is required as of the later of 3/29/13 or the date on which SDs and MSPs are required to apply for registration pursuant to § 3.10. For FCMs that are (1) registered with CFTC as of 6/4/12, and (2) currently regulated by U.S. prudential regulator or registered with SEC, compliance is required by 9/30/12. For FCMs that are (1) registered with CFTC as of 6/4/12, and (2) not currently regulated by U.S. prudential regulator and not registered with SEC, compliance is required by 3/29/13. For FCMs not registered with CFTC as of 6/4/12, compliance is required upon registration with the CFTC.