Written by: Ansley Schrimpf, Mayer Brown This week the Commodity Futures Trading Commission’s (“CFTC”) Division of Swap Dealer and Intermediary Oversight (“DSIO”) issued interpretive guidance to clarify requirements for introducing brokers (“IB”) with respect to the Customer Identification Program (“CIP”) [1] and Beneficial Ownership (“BO”) [2] rules. [3] DSIO, in coordination with the Financial Crimes Enforcement Network (“FinCEN”), is granting relief from CIP and BO rules to IBs that do not “introduce” customers to a futures commission merchant (“FCM”). Background The CFTC and FinCEN have authority to administer and enforce compliance with CIP and BO requirements under the Bank Secrecy…
CFTC Washington, DC Visit by Melinda Schramm
On Thursday, May 16, I visited the CFTC Washington DC office for a meeting with Matt Kulkin, Director of the Division of Swap Dealer & Intermediary Oversight, and Tom Smith, Deputy Director, Managed Funds & Financial Requirements Branch of the Division, along with several division staff members. Prior to the meeting, I gathered information from NIBA FCM and IB members in order to have a focused agenda of current issues that concern our community. Many topics were covered in DC — those below are slated for follow-up with the Commission: • Bulk Transfers: Most FCMs and several IBs feel that…
NFA ISSP Amendments
Reminder: April 1 effective date for amendments to NFA’s Interpretive Notice regarding Information Systems Security Programs—instructions for notifying NFA of applicable cybersecurity incidents In January 2019, NFA issued a Notice to Members announcing amendments to its Interpretive Notice entitled NFA Compliance Rules 2-9, 2-36 and 2-49: Information Systems Security Programs (Interpretive Notice). The amendments provide clarification on common questions related to training obligations and ISSP approval posed by Members to NFA, and impose a narrowly drawn notification requirement to ensure that Members notify NFA of certain cybersecurity incidents related to a Member’s commodity interest activities. The amendments will become effective on April 1, 2019. Cybersecurity incidents…...
Disruptive Trading Practices
Disruptive trading practices are prohibited and specifically addressed within CME rules and regulations. CME Group’s Market Regulation team has created the following educational course on Distruptive Practices Prohibited. If you have a few minutes it’s worth a look. Market Regulation: Disruptive Practices Prohibited – Spoofing...
NIBA Educational Series – Cybersecurity Briefing
The NIBA is pleased to announce the kick off of its educational series. This idea is to cultivate ideas, discussion and networking in an intimate setting throughout the year. This event is hosted and sponsored by Bovill. There’s a gap between Compliance and IT responsibility for security in most organizations. For example, what should an Information System Security Policy cover and how best should it be implemented? We’re delighted to invite you to our briefing and networking event on Wednesday, March 6, 2019, where we will be giving you some tips to help close this gap and discuss challenges with…
NFA adopts Interpretive Notice entitled NFA Compliance Rule 2-9: CPO Internal Controls System
NFA recently adopted an Interpretive Notice entitled NFA Compliance Rule 2-9: CPO Internal Controls System (Interpretive Notice). The Interpretive Notice requires commodity pool operator (CPO) Members, which have the ability to control customer funds, to implement an internal controls framework designed to: Protect customer funds; and Provide reasonable assurance that the books and records of a CPO’s commodity pools are accurate and reliable and that the CPO is in compliance with all CFTC and NFA requirements. The Interpretive Notice will become effective on April 1, 2019. In order to demonstrate an adequate internal controls system, the Interpretive Notice also requires…...
CME Institute: Market Regulation Course
Market Regulation works to protect market integrity, to enforce rules that protect all market participants, and to act proactively to mitigate risks to prevent damage to the marketplace. Market participants need to understand and comply with Exchange Rules. This course can assist market participants by providing information and resources necessary to meet their compliance needs. [Begin Course] ...
FIA Spoofing, Surveillance & Supervision
The CFTC and futures exchanges continue to aggressively pursue “spoofing” cases against traders. When evidence of criminal willful intent exists, they refer certain matters to the Department of Justice for criminal prosecution. The CFTC settled its first spoofing case in late December 2016. The month prior, the DOJ obtained its first criminal conviction for spoofing. Since that time, the CFTC has expanded its enforcement efforts in this area to target firms for failing to supervise traders being investigated for spoofing activity. With this Webinar, Jim Lundy and Nicholas Wendland from Drinker Biddle & Reath LLP will explore the increased regulatory…...
FY 2018 Agency Financial Report – CFTC
Each year the CFTC publishes an agency financial report which provides data on financial and performance, operations management and information on the CFTC. This is the 14th annual report that has been published. Please see the link below to access the report: CFTC 2018 Report...
Be Prepared – Tax Law Impacts
The recently enacted Tax Cuts and Jobs Act (TCJA) has made several changes to the tax law. Below we have summarized some of the changes we feel may affect some of our client base, mainly traders and investors. The TCJA suspended all miscellaneous itemized deductions, subject to a 2% floor, for individuals including investment fees and expenses. Therefore, investors are no longer entitled to these investment expenses. An important thing to note is that the TCJA did not change investment-interest expense rules. The itemized deduction is limited to investment income, and any excess is carried forward to subsequent years. The…...
