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CFTC Releases Exam Priorities

In a first time release, stemming from agency initiatives to improve its relationship with regulated entities, the Commodity Futures Trading Commission (CFTC) recently announced its 2019 Examination Priorities for registrants of the Division of Market Oversight (DMO), the Division of Swap Dealer & Intermediary Oversight (DSIO), and the Division of Clearing & Risk (DCR).

Division of Market Oversight (DMO)

DMO conducts examinations of designated contract markets (DCMs) to monitor their compliance through Rule Enforcement Reviews. In 2019, Rule Enforcement Reviews will focus on elements of DCMs’ self-regulatory programs, as well as emerging areas of self-regulation where requirements and best practices may be developing. DMO’s Compliance Branch’s 2019 Examination Priorities include:

  • cryptocurrency surveillance practices;
  • trade surveillance practices, including disruptive trading and block trades;
  • market surveillance and monitoring practices;
  • practices around market maker and trading incentive programs; and
  • DCMs’ relationships with and services received from regulatory service providers.

In addition to conducting examinations, priorities for 2019 include regulatory consultations with swaps execution facilities to provide oversight while the CFTC finalizes new rules and develops its examination program for swaps execution facilities.

Division of Swap Dealer & Intermediary Oversight (DSIO)

DSIO’s Examinations Branch is primarily responsible for overseeing derivative markets intermediaries, including futures commission merchants (FCMs), swap dealers (SDs), major swap participants (MSPs) commodity pool operators, commodity trading advisors, introducing brokers and retail foreign exchange dealers. The core focus of DSIO Exams is the protection of customer funds, with resources primarily focused on the oversight of FCMs, the only registrants permitted by regulation to hold listed derivative customers’ funds. The DSIO also performs limited oversight of approximately 100 swap dealers. DSIO’s Compliance Branch’s 2019 Examination Priorities include:

  • withdrawal of residual interest from customer accounts;
  • accepted forms of non-cash margin;
  • compliance with segregation requirements;
  • FCM use of customer depositories;
  • FCM customer account documentation; and
  • SD/MSP relationships with third-party vendors.

DSIO Exams will continue to monitor the activities of CFTC registrants including reviewing notices, risk management programs, financial statement filings, risk exposure reports, risk assessment reports, and chief compliance officer annual reports.

Division of Clearing & Risk (DCR)

DCR examines derivative clearing organizations (DCOs) including those that have been designated as systemically important by the Financial Stability Oversight Council, which are reviewed in consultation with the Board of Governors of the Federal Reserve. The scope and methodology for each examination is risk-based and individually tailored to the organization and the products it clears, seeking to identify areas of weakness in activities that are critical to a safe and efficient clearing process – financial resources, risk management, system safeguards and cyber-security policies, practices, and procedures – to assess the maturity, capabilities, and overall resilience of the DCO.

We love to see regulators work in tandem and collaborate. The SEC and FINRA led the way in providing transparency with regard to exam priorities. We can see the CFTC thought that was a good act to follow. Now, if we could just get more regulator collaboration on a global scale, we might not see the issues the SEC is having with the registration of European managers due to GDPR.

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Events

Chief Compliance Officer Roundtable: Breakfast Briefing - November 8, 2018

When: November 8, 2018 Where: Blank Rome LLP | The Chrysler Building | 405 Lexington Avenue | New York, NY 10174 | 22nd Floor Boardroom | Phone: 212.885.5000 Schedule: 9:00-9:30am - Networking...

Dorsey PF 2018 Symposium

When: September 26, 2018 (8:30 am - 6 pm Where: Dorsey & Whitney LLP | 51 W. 52nd Street | New York, NY 10019 Directions > SEC3’s President, Janaya Moscony will join...

Chief Compliance Officer Roundtable: Breakfast Briefing - June 14, 2018

When: June 14, 2018 Where: Blank Rome LLP | The Chrysler Building | 405 Lexington Avenue | New York, NY 10174 | 22nd Floor Boardroom | Phone: 212.885.5000 Schedule: 9:00-9:30am - Networking...

Webinar: 2018 SEC Exam Priorities & Recent Exam Highlights

Don’t miss the opportunity to meet with us in person to discuss the topics that matter most to you. Tobin S. Cochran, Managing Member/President of Focus 1 Associates, LLC and...

Chief Compliance Officer Roundtable: Breakfast Briefing - February 7, 2018

When: February 7, 2018 Where: Blank Rome LLP | The Chrysler Building | 405 Lexington Avenue | New York, NY 10174 | 22nd Floor Boardroom | Phone: 212.885.5000 Schedule: 9:00-9:30am - Networking...

Upcoming Events - September & October 2017

Upcoming Events Don’t miss the opportunity to meet with us in person to discuss the topics that matter most to you. SEC3 is teaming up with industry experts in NYC to discuss...

May 23, 2017 - Webcast: WannaCry Ransomware: Were You Really Protected or Just L…

When: Tuesday, May 23rd, 2017 | Schedule: 12pm - 1pm EST Who: Paul Caiazzo, CEO and Co-Founder, TruShield Security Solutions Michael Brice, Founder, BW Cyber Services John Lukan, Managing Director, SEC Compliance Consultants, Inc. We...

June 14, 2017 - Compliance Breakfast Briefing

8:30-9:00am - Networking and Continental Breakfast 9:00-10:30am - Program Location: Willkie Farr & Gallagher LLP | 600 Travis Street | Suite 2310 | Houston, TX Barry Barbash from Willkie Farr & Gallagher LLP,...

June 13, 2017 - Compliance Breakfast Briefing

8:30-9:00am - Networking and Continental Breakfast 9:00-10:30am - Program Location: Haynes and Boone, LLP | 2323 Victory Avenue | Suite 700 | Dallas, TX 75219 Validated parking is available in the garage attached...

May 31, 2017 - Chicago

9:00-9:30 a.m - Networking and Continental Breakfast 9:30-11:00 a.m - Program Location: Baker & McKenzie LLP | 300 East Randolph Drive | Suite 5000 | Chicago, IL 60601 Kristin Gonzalez and Jerome Tomas...

May 17, 2017 (NYC WIMF)

This event is by invitation only. Please email info@seccc.com to learn more.

May 15, 2017 (NYC Chief Compliance Officer Roundtable)

9:00-9:30am - Networking and Continental Breakfast 9:30-11:00am - Program Location: Blank Rome LLP | The Chrysler Building | 405 Lexington Avenue | New York, NY 10174 | 22nd Floor Boardroom | Phone:...

Webcast: The Most Insidious Cybersecurity Threat Is Also The Least Understood

When: Tuesday, April 25th | Schedule: 12pm - 1pm EST Who: Paul Caiazzo, CEO and Co-Founder, TruShield Security Solutions Michael Brice, Founder, BW Cyber Services John Lukan, Managing Director, SEC Compliance Consultants, Inc. Ransomware, the...

CCO Liability (Part III): Managing Liability Webinar

In this webinar, panelists discuss indemnifications and insurance as potential remedies to address the direct financial risks to a CCO. Attendees will learn: What terms and conditions should Chief Compliance Officers be...

Webinar: CCO Liability (Part III): Managing Liability: Navigating Indemnities an…

When: Tuesday, February 21, 2017 Schedule: 11:00am ET / 10:00am CT / 9:00am MT / 8:00am PT / 7:00am AT Description of Webinar: The National Society of Compliance Professionals is pleased to host...