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Notice I-16-01

January 06, 2016

Revised SD and MSP 4s review process

As part of the registration process, each swap dealer (SD) and major swap participant (MSP) must submit documentation demonstrating the ability to comply with Commodity Futures Trading Commission (CFTC) Regulations Implementing Section 4s of the Commodity Exchange Act (4s submissions or documentation).

Subject to CFTC oversight, NFA conducts a detailed review of each firm's 4s submissions on a topic-by-topic basis. NFA then prepares a letter (Feedback Letter) providing commentary on areas of the firm's documentation that do not appear to adequately demonstrate the SD's or MSP's ability to comply with a particular 4s topic area.

To improve the efficiency of the 4s review process, the CFTC has approved the following modifications.

Modifications to the 4s submission review process

Effective immediately, each SD and MSP will no longer be required to submit additional documentation or revisions in response to Feedback Letters. NFA will continue to issue all Feedback Letters through NFA's EasyFile Registration Documentation Submission System (RDSS). See Notice I-15-11 for additional information on RDSS. Each SD and MSP will still be responsible for completing the revisions or additions as required in the Feedback Letter. However, instead of submitting revised documentation to NFA, each SD and MSP will be required to submit an attestation signed by a firm principal attesting that the firm has revised its policies and procedures to address comments in the Feedback Letter. This attestation must be submitted through RDSS within the timeframe prescribed in the Feedback Letter. Each SD and MSP will receive a template of the attestation as an attachment to its Feedback Letter.

Once the attestation is completed and filed with NFA, NFA will issue a letter (Acknowledgement Letter) informing the SD or MSP that NFA does not have any further inquiry regarding the 4s topic area at that time.

Any SD or MSP that does not complete the items in the Feedback Letter within the specified timeframe will be required to notify NFA in writing through RDSS, providing a reason for not completing the revisions. NFA will notify CFTC staff of any failures to provide the attestation by the date required.

Information for each SD and MSP regarding active 4s Feedback Letters

For 4s topic areas where firms have an active 4s Feedback Letter (i.e., NFA has not issued an Acknowledgment Letter), NFA will update RDSS in the coming weeks by re-issuing Feedback Letters, as applicable, identifying where an attestation is required to be submitted instead of revised documentation. This includes the re-issuance of US SD and MSP Risk Management and External Business Conduct Standards (BCS) Feedback Letters. The revised Feedback Letter will include the due date for submitting the attestation and will also have an attestation template attached. NFA will reach out to each SD and MSP prior to the reissuance of Feedback Letters.

As always, any SD or MSP with questions on NFA's Feedback Letters should contact NFA for clarification. Although each SD and MSP will no longer be required to submit additional or revised documentation to NFA through RDSS, NFA will review a firm's revised policies and procedures as part of the examination or other regulatory oversight processes.

If you have any questions concerning these changes, please contact NFA's Information Center by calling 312-781-1410 or 800-621-3570, or emailing information@nfa.futures.org.

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