CFTC
CFTC Adopts Rules Regarding Risk Management Programs for FCMs
New CFTC Regulation 1.11 imposes specific risk management requirements on FCMs that accept any money, securities, or property (or extend credit in lieu thereof) to margin, guarantee, or secure any trades or contracts that result from soliciting or accepting orders for the purchase or sale of any commodity interest.
In accordance with the new regulation, each FCM is required to establish, maintain, and enforce a system of risk management policies and procedures designed to monitor and manage the risks associated with the activities of the FCM, taking into account market, credit, liquidity, foreign currency, legal, operational, settlement, segregation, technological, capital, and any other applicable risks together with a description of the risk tolerance limits set by the FCM and the underlying methodology in the written policies and procedures.
FCMs must file their initial 'Risk Management Program' electronically through WinJammer with the CFTC and DSRO by July 12, 2014.
CFTC Adopts New Position and Trading Activity Reporting Requirements
In late 2013, the CFTC approved final rules that implement position and trading activity based reporting requirements for market participants that trade futures and swaps. The final rules modify the existing Forms 102, 102S, and 40 and implement two new forms that will be used to identify and collect information related to accounts that exceed a specified daily trading volume. All reporting under these final rules will be made electronically.
The compliance date for the final rule is February 18, 2014.
NFA
NFA Reminds Members of New Recordkeeping Requirements under NFA Rule 2-10(a) and CFTC Regulation 1.35(a)
In December 2012, the CFTC amended certain record keeping requirements of Regulation 1.35(a). The amendments specify that FCMs, RFEDs and certain are required to keep a tape record of all oral communications provided or received concerning quotes, solicitations, bids, offers, instructions, trading and prices that lead to the execution of a transaction in a commodity interest and related cash or forward transaction.
These new recordkeeping requirements became effective on December 21, 2013.
FinCEN Updates AML/CFT Deficiency Lists
In late 2013, FinCEN issued an advisory announcing that it had updated its list of jurisdictions with strategic AML/CFT deficiencies. The NFA reminded its member FCMs and IBs to review this advisory to ensure that their AML programs have the most current information on FATF identified jurisdictions with AML/CFT deficiencies and revise their AML programs accordingly.
The list was updated on December 4, 2013 and can be found at FinCEN's website.
FINRA
SEC Approves Limited Exemption from FINRA's Spinning Rule
The SEC recently approved amendments to FINRA Rule 5131, also known as the 'Spinning Rule' that provides a limited exception to facilitate firm compliance when allocating shares of a new issue to the accounts of certain unaffiliated private funds.
The limited exemption goes into effect on February 3, 2014.
Mark E. Ruddy, Esq.
Ruddy Law Office, PLLC
1225 - 15th Street NW
Washington, D.C. 20005
Tel: (202) 797-0762
Fax: (202) 318-0543
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