Swap Examination FAQs
Dodd-Frank regulations require registered SDs to become Members of a registered futures association, i.e. NFA. One of NFA's mandates is to conduct examinations of SD and MSP Member firms for compliance with the CFTC 4s Implementing Regulations. NFA on-site examinations will consist of observations, meetings and interviews with key personnel to understand the infrastructure and procedures in place supporting the firm's compliance with the regulations. NFA will also examine supporting evidence such as exception reports and management reports.
NFA hopes to leverage the commonalities between all entities and conduct a single exam visit; however, depending on the circumstances, it may be necessary to conduct individual on-site examinations.
NFA sends the First Day Letter which provides formal notification of the upcoming examination, the expected start date, the duration of the on-site visit and a request for certain documents. The First Day Letter also identifies the initial meetings NFA would like to have with firm personnel and the topics to be covered. This will allow firms more time to identify the appropriate individuals and to schedule the meetings. With respect to submitting exam material to NFA, effective September 2015, NFA implemented a new Regulatory Filing System (RFS), which replaces the Filesbox that was previously used to submit documents to NFA. This new system increases security over firm information. Detailed instructions will be provided with the First Day Letter.
NFA's presence on-site will vary depending on the size of the SD, the number of affiliates, as well as the nature and scope of the examination being conducted.
Yes. All SDs are subject to on-site examinations.
The investigations function has the responsibility to investigate potential non-compliance matters involving SDs that may be outside the scope of an examination.