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Notice I-19-12

May 08, 2019

Effective Date for Amendments to Incorporate Swaps into Certain Compliance Rules and Interpretive Notices

NFA recently amended several Compliance Rules and Interpretive Notices to expressly incorporate swaps, counterparties and related concepts. The amendments also clarify that certain rules apply to all commodity interests and specify that other rules only apply to specific membership categories. The amendments will become effective on July 1, 2019.

The NFA Compliance Rules listed below will be amended as follows:

  • Rule 1-1 (Definitions) to add definitions for the terms commodity interest, major swap participant, swap dealer and swap;
  • Rule 2-2 (Fraud and Related Matters) to include references to swaps, counterparties and related concepts;
  • Rule 2-3 (Sharing in Profits) to expand it to cover all commodity interests;
  • Rule 2-6 (Expelled or Suspended Member or Associate) to expand the rule to apply to all commodity interests, incorporate language from an existing Interpretive Notice and specify that this rule only applies to FCM, IB, CPO, and CTA Members, FDMs and Associates;
  • Rule 2-10 (Recordkeeping) to list all Member categories to make clear that the requirements relating to English records and fluency apply to SD and MSP Members;
  • Rule 2-38 (Business Continuity and Disaster Recovery Plan) to clarify the Member categories subject to various aspects of this rule; and
  • Rule 3-15 (Member or Associate Responsibility Actions) to incorporate references to commodity interest and counterparties.

Corresponding amendments will also be made to Interpretive Notice 9005 – NFA Compliance Rule 2-4: Guidelines for the Disclosure of FCMs and IBs of Costs Associated with Futures Transactions; Interpretive Notice 9056 – NFA Compliance Rule 2-6: Conducting Commodity Futures Business with an Expelled or Suspended Member or Associate; Interpretive Notice 9059 – NFA Compliance Rule 2-4: Disclosure Guidelines for FCMs Offering Sweep Accounts; and Interpretive Notice 9068 – NFA Compliance Rules 2-4 and 2-36: Prohibition on the Use of Certain Electronic Funding Mechanisms.

More information on these amendments is available in the December 10, 2018 submission letter to the CFTC and the March 6, 2019 amended submission. If you have any questions regarding these amendments, please contact Sarah Iverson, Director, Compliance (312-781-1202 or siverson@nfa.futures.org) or Joe Zangri, Managing Director, OTC Derivatives (212-346-5632 or jzangri@nfa.futures.org).

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