[Federal Register Volume 77, Number 12 (Thursday, January 19, 2012)]
[Notices]
[Pages 2708-2709]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-791]


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COMMODITY FUTURES TRADING COMMISSION


Performance of Registration Functions by National Futures 
Association With Respect To Swap Dealers and Major Swap Participants

AGENCY: Commodity Futures Trading Commission.

ACTION: Notice and Order.

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SUMMARY: The Commodity Futures Trading Commission (Commission) is 
authorizing the National Futures Association (NFA), effective January 
19, 2012, in accordance with the standards established by the Commodity 
Exchange Act (CEA) and the Commission's regulations issued thereunder, 
to take the following actions: To process and grant applications for 
registration and withdrawals of registration with respect to swap 
dealers (SDs) and major swap participants (MSPs), and to notify of 
provisional registration; to confirm initial compliance with 
requirements applicable to SDs and MSPs under CEA Section 4s; to 
conduct proceedings to deny, condition, suspend, restrict or revoke the 
registration of any SD or MSP or of any applicant for registration in 
either category; to maintain records regarding SDs and MSPs; and to 
serve as the official custodian of those Commission records.

DATES: Effective date: January 19, 2012.

FOR FURTHER INFORMATION CONTACT: Barbara S. Gold, Associate Director, 
Christopher W. Cummings, Special Counsel, or Elizabeth Miller, 
Attorney-Advisor, Division of Swap Dealer and Intermediary Oversight, 
1155 21st Street NW., Washington, DC 20581. Telephone Number: (202) 
418-6700 and electronic mail: [email protected], [email protected], or 
[email protected].

SUPPLEMENTARY INFORMATION

I. Authority and Background

    In a separate document published elsewhere in today's Federal 
Register, the Commission is issuing final regulations regarding the 
registration process for SDs and MSPs. These final regulations follow 
the publication of proposed regulations on November 23, 2010,\1\ and 
they implement the registration requirements for SDs and MSPs set forth 
in the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-
Frank Act).\2\ Specifically, Section 731 of the Dodd-Frank Act added 
Sections 4s(a) and 4s(b) to the CEA \3\ to provide for the registration 
of SDs and MSPs in pertinent part as follows:
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    \1\ 75 FR 71379.
    \2\ Public Law 111-203, 124 Stat. 1376 (2010). The text of the 
Dodd-Frank Act may be accessed through the Commission's Web site, 
http://www.cftc.gov.
    \3\ The CEA and the Commission's regulations issued thereunder 
similarly may be accessed through the Commission's Web site.
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    (a) REGISTRATION.--
    (1) SWAP DEALERS.--It shall be unlawful for any person to act as a 
swap dealer unless the person is registered as a swap dealer with the 
Commission.
    (2) MAJOR SWAP PARTICIPANTS.--It shall be unlawful for any person 
to act as a major swap participant unless the person is registered as a 
major swap participant with the Commission.
    (b) REQUIREMENTS.--
    (1) IN GENERAL.--A person shall register as a swap dealer or major 
swap participant by filing a registration application with the 
Commission.
    (2) CONTENTS.--
    (A). IN GENERAL.--The application shall be made in such form and 
manner as prescribed by the Commission, and shall contain such 
information, as the Commission considers necessary concerning the 
business in which the applicant is or will be engaged.

Pursuant to CEA Sections 4s(a) and 4s(b), then, the Commission is today 
issuing Regulations 23.21(a) and 23.21(b), which respectively subject 
each person who meets the definition of an SD or MSP to the 
registration provisions under the CEA and to Part 3 of the Commission's 
regulations.\4\

[[Page 2709]]

Additionally, pursuant to CEA Sections 4p, 8a and 17, the Commission is 
issuing Regulation 170.16, which provides that each registered SD or 
MSP must become and remain a member of an RFA.
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    \4\ Regulation 23.21(c) makes clear that each affiliate of an 
insured depository institution described in Dodd-Frank Act Section 
716(c) is subject to the registration provisions under the CEA and 
Part 3 of the regulations as an SD, if the affiliate is an SD, or as 
an MSP, if the affiliate is an MSP.
     The Commission also is issuing today such amendments to Part 3 
of its regulations as may be necessary to accommodate the 
registration of SDs and MSPs thereunder.
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    CEA Section 4s further directs the Commission to adopt regulations 
applicable to SDs and MSPs with respect to the following areas: Capital 
and margin, reporting and recordkeeping, daily trading records, 
business conduct standards, documentation standards, duties, chief 
compliance officer,\5\ and, with respect to uncleared swaps, 
segregation.\6\
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    \5\ Sections 4s(e) through 4s(k), respectively, added to the CEA 
by Dodd-Frank Act Section 731.
    \6\ Section 4s(l), added to the CEA by Dodd-Frank Act Section 
724(c).
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    CEA Section 8a(10) provides that the Commission may authorize any 
person--including an RFA--to perform any of the registration functions 
under the CEA. Further, CEA Section 17(o) provides that the Commission 
may require an RFA to perform registration functions under the CEA with 
respect to its members.\7\ The Commission has previously authorized NFA 
to perform the full range of registration functions with regard to 
applicants for and persons registered as: A futures commission 
merchant, commodity pool operator or commodity trading advisor; \8\ an 
introducing broker; \9\ a leverage transaction merchant; \10\ a floor 
broker; \11\ a floor trader; \12\ or a retail foreign exchange 
dealer.\13\ By today's Order, the Commission is authorizing NFA, in 
accordance with the standards established by the CEA and the 
Commission's regulations issued thereunder,\14\ to perform the full 
range of registration functions under the CEA and the Commission's 
regulations with regard to SDs and MSPs. It is also authorizing NFA to 
notify an applicant for registration as an SD or an MSP that it is 
provisionally registered, and to confirm the applicant's initial 
compliance with such regulations as the Commission may adopt to 
implement the requirements for SDs and MSPs in CEA Sections 4s(e) 
through 4s(l).
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    \7\ Section 17(o)(1) excepts from this authority a member who is 
a ``registered entity.'' CEA Section 1a(40) defines this term to 
include, among other persons, a board of trade designated as a 
contract market under CEA Section 5 and a swap execution facility 
registered under CEA Section 5h.
    Although CEA Section 17 provides that `[a]ny association of 
persons may be registered with the Commission as a registered 
futures association,'' to date, NFA is the sole association that has 
applied for and has been granted registration as a futures 
association with the Commission.
    \8\ See 49 FR 39593 (Oct. 9, 1984).
    \9\ See 48 FR 35158 (Aug. 3, 1983).
    \10\ See 54 FR 19556 (May 8, 1989).
    \11\ See 51 FR 34490 (Sep. 29, 1986).
    \12\ See 58 FR 19657 (Apr. 15, 1993).
    \13\ See 75 FR 55310 (Sep. 10, 2010).
    \14\ See, e.g., 49 FR 8208 (Mar. 5, 1984), whereby, among other 
things, the Commission: Amended Part 3 of its regulations, which 
concerns registration under the CEA, by adopting a new Subpart C to 
provide for denial, suspension or revocation of registration; and 
amended Appendix A to Part 3, to provide for interpretative advice 
with respect to statutory disqualification under CEA Sections 
8a(2)(C) and 8a(2)(E) and Sections 8a(3)(J) and 8a(3)(M).
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    The Commission further notes that it has, by prior Orders, 
authorized NFA to maintain various Commission registration records, and 
has certified NFA as the official custodian of such records for the 
Commission.\15\ The Commission has determined, in accordance with its 
authority under Section 8a(10) of the Act, to authorize NFA to maintain 
and serve as the official custodian of the Commission's registration 
records with respect to SDs and MSPs.
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    \15\ See, e.g., 49 FR 39593 (Oct. 9, 1984) (regarding the 
registration records of futures commission merchants, commodity pool 
operators and commodity trading advisors), and 75 FR 55310 (Sep. 10, 
2010) (regarding the registration records of retail foreign exchange 
dealers).
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    In maintaining the Commission's registration records pursuant to 
this Order, NFA shall remain subject to all other requirements and 
obligations imposed upon it by the Commission in existing or future 
Orders or regulations. In this regard, NFA shall also implement such 
additional procedures and shall modify existing procedures as are 
necessary to ensure the security and integrity of these records as may 
be acceptable to the Commission; to facilitate prompt access to these 
records by the Commission and its staff; to facilitate disclosure of 
public or nonpublic information in these records when permitted by 
Commission Orders or regulations; to keep logs as required by the 
Commission concerning disclosures of nonpublic information; and 
otherwise to safeguard the confidentiality of the records.

II. Conclusion and Order

    The Commission has determined, pursuant to the provisions of CEA 
Sections 8a(10) and 17(o), to authorize NFA, effective January 19, 
2012, to perform the following registration functions:
    (1) To process and grant applications for registration and 
withdrawals from registration of swap dealers (SDs) and major swap 
participants (MSPs), and to notify of provisional registration;
    (2) In connection with processing and granting applications for 
registration of SDs and MSPs, to confirm initial compliance with such 
regulations as the Commission may adopt to implement CEA Sections 4s(e) 
through 4s(k) and, where applicable, CEA Section 4s(l);
    (3) To conduct proceedings to deny, condition, suspend, restrict or 
revoke the registration of any SD or MSP or of any applicant for 
registration in either category; and
    (4) To maintain records regarding SDs and MSPs, and to serve as the 
official custodian of those Commission records.
    NFA shall perform these functions in accordance with the standards 
established by the CEA and the Commission's regulations issued 
thereunder. NFA shall follow the same procedures with respect to 
recordkeeping, disclosure and tracking of fitness investigations and 
adverse action proceedings concerning SDs and MSPs as it must follow in 
cases involving other registrants.
    These determinations are based upon the Congressional intent 
expressed in CEA Sections 4s(a), 4s(b), 8a(10), and 17(o). This Order 
does not, however, authorize NFA to accept or act upon requests for 
exemption from registration, or to render ``no-action'' or 
interpretative letters with respect to applicable registration 
requirements.
    Nothing in this Order, or in CEA Section 8a(10) or 17(o), shall 
affect the Commission's authority to review the performance by NFA of 
Commission registration functions, to adopt and enforce regulations 
applicable to SDs and MSPs as Commission registrants, and to conduct 
on-site examinations of the operations and activities of SDs and MSPs 
as Commission registrants.

    Issued in Washington, DC, on January 11, 2012.
David A. Stawick,
Secretary of the Commission.

Appendices to Performance of Registration Functions by National Futures 
Association With Respect to Swap Dealers and Major Swap Participants--
Commission Voting Summary and Statements of Commissioners

    Note:  The following appendices will not appear in the Code of 
Federal Regulations

Appendix 1--Commission Voting Summary

    On this matter, Chairman Gensler and Commissioners Sommers, 
Chilton, O'Malia and Wetjen voted in the affirmative; no 
Commissioner voted in the negative.

[FR Doc. 2012-791 Filed 1-18-12; 8:45 am]
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