On March 17, the staff of the Commodity Futures Trading Commission (CFTC) issued a series of no-action letters to provide certain CFTC-regulated entities and registrants with temporary regulatory relief from a targeted set of regulatory requirements.
The CFTC’s Division of Swap Dealer and Intermediary Oversight (DSIO) issued a set of Staff Letters aimed at a broad range of market participants — including futures commission merchants (FCMs), introducing brokers (IBs), swap dealers (SDs), retail foreign exchange (forex) dealers, floor brokers, and members of designated contract markets (DCMs) and swap execution facilities (SEFs). These letters provide for temporary no-action relief from a number of CFTC regulatory requirements, as described below.
- Until June 30, 2020, DSIO will not recommend enforcement action against FCMs, IBs, SDs, retail forex dealers, floor brokers and members of DCMs and SEFs for failure to record the time and date on certain order records and trade information by time stamp or other timing device as required by CFTC rules if the personnel who are responsible for preparing such records are mandated by the firm’s BCP to be absent from their normal offices, provided that the required records are created, are maintained, and include any required date and time to the nearest minute. This date and time entry could be manually entered.
- Until June 30, 2020, DSIO will not recommend enforcement action against FCMs, IBs, SDs, retail forex dealers and floor brokers for failure to record the oral communications of personnel who would otherwise be required to use a recorded line pursuant to CFTC rules if such personnel are mandated by the firm’s BCP to be absent from their normal offices, provided that a written record of the communication is maintained that identifies date, time, participants and subject matter, and that the firm takes “affirmative steps” to collect and maintain any written materials prepared by affected personnel in connection with such communications.
- Until June 30, 2020, DSIO will not recommend enforcement action against floor brokers who are not physically located in a pit or other place determined by a contract market, nor will floor brokers be subject to a requirement to register as an IB because of failure to so locate, if the floor broker is required by the DCM’s BCP to be absent from such place.
- DSIO will not recommend enforcement action against FCMs and SDs who would otherwise be required to provide the CFTC with a copy of their Chief Compliance Officer (CCO) annual reports prior to September 1, 2020, provided that they submit such reports within 30-calendar days of their original due dates.
The CFTC’s Division of Market Oversight (DMO) issued a set of Staff Letters covering SEFs and DCMs. These letters provide for temporary no-action relief from certain audit trail-related requirements for SEFs and DCMs, as well as an extension of the deadline for submission of CCO annual compliance and certain financial reports for SEFs.
- Until June 30, 2020, DMO will not recommend enforcement action against any SEFs that cannot meet requirements around recording of voice communications, to the extent that voice trading personnel are outside their normal offices, provided that the SEF makes reasonable efforts to record in writing the time, date, parties and subject matter of unrecorded conversations, all transaction terms are captured in SEF systems, and orders (even if placed on unrecorded lines) are retained in the SEF’s normal audit trail.
- Until June 30, 2020, DMO will not recommend enforcement action against DCMs that fail to comply with audit trail requirements, to the extent that those failings are a result of interactions with market participants who are relying on the DSIO Staff Letters described above, provided that the DCM requires such participants to comply with the applicable conditions of those DSIO Staff Letters and that orders entered by such participants are retained in the DCM’s normal audit trail.
DMO will not recommend enforcement action against any SEF or SEF CCO for failure to timely submit to the CFTC either an annual compliance report or a fourth quarter financial report (where either report would have been due prior to September 1, 2020), provided that such reports are submitted no later than 120 days after the end of the fiscal year for that SEF.
NOTE: On March 17, the National Futures Association provided relief from parallel NFA requirements for Members that are in compliance with the terms of the CFTC staff no-action relief.
The NFA statement is available here.