[Federal Register Volume 84, Number 47 (Monday, March 11, 2019)]
[Notices]
[Pages 8671-8696]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-04297]


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COMMODITY FUTURES TRADING COMMISSION


Revised Registration Form 7-R

AGENCY: Commodity Futures Trading Commission.

ACTION: Notice of revised form.

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SUMMARY: The Commodity Futures Trading Commission (the ``Commission'' 
or ``CFTC'') is revising its Form 7-R, the application form that 
entities must use to register with the Commission as a commodity pool 
operator, commodity trading advisor, introducing broker, floor trader 
firm, retail foreign exchange dealer, futures commission merchant, 
leverage transaction merchant, swap dealer, or major swap participant 
(collectively, ``applicants'').

DATES: Implementation date: The new, revised version of Form 7-R shall 
be implemented (and the prior version shall be superseded) as of the 
date upon which the National Futures Association (``NFA'') makes the 
new, revised version

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of the Form 7-R available on the NFA website for use by applicants.

FOR FURTHER INFORMATION CONTACT: Matthew Kulkin, Director, 202-418-
5213, [email protected]; or Christopher Cummings, Special Counsel, 202-
418-5445, [email protected], Division of Swap Dealer and Intermediary 
Oversight, Commodity Futures Trading Commission, 1155 21st Street NW, 
Washington, DC 20581.

SUPPLEMENTARY INFORMATION: 

I. Background

    Entities that engage in certain specified business in the 
derivatives markets regulated by the Commission are required to 
register with the Commission by filing a completed Form 7-R with 
NFA.\1\ These applicants include: Futures commission merchants, retail 
foreign exchange dealers, introducing brokers, commodity trading 
advisors, commodity pool operators, leverage transaction merchants, 
swap dealers, major swap participants, and floor trader firms.\2\ 
Applicants have been required to use Form 7-R since 1977.\3\ In the 
past, Form 7-R also was used to register with NFA and to apply for NFA 
membership.
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    \1\ 17 CFR 3.10(a)(2), 3.11(a), and 3.12(c).
    \2\ 17 CFR 3.11(a); 3.12(c).
    \3\ Revision of Registration Forms and Amendment of Related 
Rules, 42 FR 23988 (May 11, 1977) (Form 7-R replaced Forms 1-R, 5-R 
and 6-R).
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    Form 7-R requests information about the applicant that can be used 
to assess the applicant's fitness to engage in business in the 
registration categories referenced above. Although Form 7-R is a 
Commission form, it is maintained and used primarily by the NFA.\4\ 
Pursuant to section 17(o) of the Commodity Exchange Act (``Act''),\5\ 
Regulation 3.2,\6\ and a series of orders, the Commission delegated to 
NFA certain registration functions including, among other things, the 
processing of all Form 7-R filings.\7\ Since the first delegation to 
NFA in 1983, NFA has developed substantial expertise in registration 
matters, including reviewing and processing completed Forms 7-R. In 
2002, with the approval of the Commission, NFA transitioned from a 
paper-based registration system to an online registration system that 
utilizes, among other things, an electronic version of Form 7-R.\8\
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    \4\ NFA is currently the only registered futures association 
authorized by the Commission in accordance with section 17 of the 
Commodity Exchange Act.
    \5\ 7 U.S.C. 21(o) (2012).
    \6\ 17 CFR 3.2.
    \7\ See, e.g., Introducing Brokers and Associated Persons of 
Introducing Brokers; Authorization of National Futures Association 
to Perform Commission Registration Functions, 48 FR 35158 (Aug. 3, 
1983); Performance of Registration Functions by National Futures 
Association, 49 FR 39593 (Oct. 9, 1984) (futures commission 
merchants, commodity pool operators, commodity trading advisors, and 
associated persons thereof); Performance of Registration Functions 
by National Futures Association; Delegation of Authorities; 
Performance of Registration Functions by National Futures 
Association with Respect to Floor Traders and Floor Brokers, 58 FR 
19657 (Apr. 15, 1993); and Performance of Registration Functions by 
National Futures Association with Respect to Swap Dealers and Major 
Swap Participants, 77 FR 2708 (Jan. 19, 2012).
    \8\ Registration of Intermediaries, 67 FR 38869 (June 6, 2002).
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II. Revisions to Commission Form 7-R

    NFA has requested that the Commission make several changes to Form 
7-R.\9\ Upon consideration of NFA's request, the Commission is revising 
and updating Form 7-R. In addition, the Commission is updating the Form 
7-R Privacy Act and Paperwork Reduction Act Statements. The Form 7-R 
revisions are described in this Notice.\10\
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    \9\ Request from NFA to CFTC, dated March 23, 2018. This 
communication is on file with the Commission.
    \10\ This Notice describes the technical changes to Form 7-R. 
The Commission also is making a number of minor, non-substantive 
changes to Form 7-R that are not described herein.
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    First, revised Form 7-R incorporates new functionality throughout 
the form, consisting of hyperlinks to the text of the applicable 
provisions of the Act, Commission regulations, and NFA Rules, whenever 
those authorities are referenced in the form. Additionally, Form 7-R 
incorporates certain clarifying language where appropriate. For 
example, the term ``futures'' has been replaced with the term 
``derivatives'' in several locations to more accurately reflect the 
full scope of the Commission's jurisdiction. Similarly, the reference 
to a failure ``to pay an award issued in a futures-related 
arbitration'' was replaced with the phrase ``failure to pay an award 
related to a CFTC-related product.''
    In the section titled ``Location of Business Records,'' revised 
Form 7-R no longer separately requests that non-U.S. applicants 
identify the non-U.S. address where their business records are located. 
Instead, both U.S. and non-U.S. applicants are required to comply only 
with the existing requirements of Form 7-R to identify the location of 
their business records, which remain unchanged, and, for non-U.S. 
applicants, to indicate that such records will be produced for 
inspection at NFA's offices, or at another physical location (not a 
post office box) within the U.S. that the applicant identifies.
    In the section titled ``Holding Company Information,'' the revised 
Form 7-R requests additional information about any entity that is a 
principal (as defined in Form 7-R) of the applicant. Form 7-R 
previously required applicants to identify by name any entity that was 
a principal of the applicant. The revised Form 7-R requires that, for 
each entity that is principal of the applicant, the applicant must 
provide the entity's Federal EIN and the location where the entity is 
incorporated, organized, or established. This additional information is 
intended to ensure accurate identification of the entity, given that 
firms sometimes can have the same or similar names.
    The sections in Form 7-R titled ``Disciplinary Information--
Criminal Disclosures,'' ``Disciplinary Information--Regulatory 
Disclosures,'' and ``Disciplinary Information--Financial Disclosures'' 
contain a series of questions that inquire about the disciplinary 
history of the applicant. These questions are designed to identify and 
gather information that may reflect on the fitness of the applicant and 
whether the applicant may be subject to a statutory disqualification 
from registration.\11\ To this end, in the section titled 
``Disciplinary Information--Regulatory Disclosures,'' a new question 
was added to existing Question E. Among other things, Question E 
inquires whether the applicant violated, or aided and abetted the 
violation of, any investment-related statutes or regulations, a 
potential statutory basis for refusing or conditioning 
registration.\12\ The new question directs the applicant to disclose 
whether it has ever been found to have ``failed to supervise another 
person's activities under any investment-related statute or 
regulation.'' \13\ The new question is intended to ensure complete 
disclosure of conduct that may result in a refusal or limitation on 
registration.
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    \11\ See 7 U.S.C. 12(a) and (3) (2012).
    \12\ 7 U.S.C. 12(a)(3).
    \13\ See 7 U.S.C. 12(a)(3)(C).
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    Separately, NFA is simplifying the process by which it requests 
supplemental information and documentation regarding the applicant's 
criminal, regulatory, or financial disclosures. The prior version of 
Form 7-R requested that applicants provide a written explanation of the 
facts and circumstances regarding any such disclosures. Applicants were 
also separately requested to provide NFA with copies of pertinent 
documents associated with each disclosure. To consolidate and modernize 
this process, the revised Form 7-R allows applicants to complete a 
separate ``Disclosure Matter Page'' for each matter, instance,

[[Page 8673]]

or event requiring disclosure and to simultaneously upload all 
pertinent documents associated with each disclosure. The Disclosure 
Matter Page provides applicants with an efficient and effective method 
of supplying the supplemental information and documentation that NFA 
requests in the normal course whenever an applicant responds 
affirmatively to any of the questions regarding criminal, regulatory or 
financial disclosures.
    Lastly, questions that pertain only to NFA membership have been 
removed from the form. As noted above, in the past, Form 7-R functioned 
both as a registration form for the Commission and NFA, and as an 
application for NFA membership. To the extent that questions ask for 
information that is necessary for NFA membership but is not necessary 
for registration, those questions have been removed from the form and 
will appear in a separate application for NFA membership. Specifically, 
revised Form 7-R no longer contains: a series of questions that inquire 
whether the applicant will transact in retail off-exchange foreign 
currency, swap, futures, or options; a question that is directed to 
applicants that are registering in multiple capacities that asks them 
to select the capacity in which they intend to vote on NFA membership 
matters; the question that asks applicants that are applying to 
register as a futures commission merchant to indicate whether the 
applicant has ``applied for membership at any United States commodity 
exchange;'' a question that asks applicants that are applying for 
registration as a swap dealer or major swap participant to indicate 
whether the applicant is currently regulated by other U.S. regulators 
and to identify those regulators; and lastly, contact information for 
the applicant's Membership Contact, Accounting Contact, Assessment Fee 
Contact, Arbitration Contact, Compliance Contact, or Chief Compliance 
Officer Contact.
    A revised version of Form 7-R that incorporates the changes 
discussed in this Notice, as well as other minor, non-substantive 
changes, is set forth in Appendix 2 to this Notice.

III. Related Matters

Paperwork Reduction Act

    Recordkeeping or information collection requirements under the 
Paperwork Reduction Act (``PRA'') related to Form 7-R exist under 
current law. The titles for the existing information collections are 
``Registration Under the Commodity Exchange Act,'' Office of Management 
and Budget (``OMB'') control number 3038-0023, and ``Registration of 
Swap Dealers and Major Swap Participants,'' OMB control number 3038-
0072. The preliminary view of the Commission is that the revisions to 
Form 7-R may modify the existing recordkeeping or information 
collection requirements under the PRA. To ensure compliance with the 
PRA, the Commission, concurrently with this Notice, is publishing in 
the Federal Register a separate notice and request for comment on the 
amended PRA burden associated with the revised Form 7-R. The Commission 
also will submit to OMB an information collection request to amend the 
information collection, in accordance with 44 U.S.C. 3506(c)(2)(A) and 
5 CFR 1320.8(d).

    Issued in Washington, DC, on March 5, 2019, by the Commission.
Christopher Kirkpatrick,
Secretary of the Commission.

Appendices to Notice of Revised Form--Commission Voting Summary and 
Revised Registration Form 7-R

Appendix 1--Commission Voting Summary

    On this matter, Chairman Giancarlo and Commissioners Quintenz, 
Behnam, Stump, and Berkovitz voted in the affirmative. No 
Commissioner voted in the negative.

Appendix 2--Revised Registration Form 7-R

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[FR Doc. 2019-04297 Filed 3-8-19; 8:45 am]
 BILLING CODE 6351-01-C