April 5, 2022

Swap Dealer Settles NFA Margin, Business Conduct Violations

A CFTC-registered swap dealer settled NFA charges for rule violations concerning posting variation margin on swaps and supervision over external business conduct.

According to the NFA decision, the firm (1) failed to collect or post variation margin on certain swaps, in violation of CFTC Reg. 23.153 ("Collection and posting of variation margin"), and NFA Compliance Rule 2-49(a) ("Swap Dealers and Major Swap Participants Regulations"); (2) violated external business conduct requirements, including CFTC Regs. 23.402(a), .402(b), .402(g) ("General Provisions") and CFTC Rule 23.431 ("Disclosures of material information"); (3) failed to keep certain required records under CFTC Reg. 23.202(a) ("Daily Records"), (4) violated NFA Compliance Rule 2-49(a) by not promptly submitting certain information to NFA; and (5) violated CFTC Reg. 23.602(a) ("Diligent supervision") and NFA Compliance Rule 2-49(a) for supervisory failures including failures to monitor compliance with certain external business conduct standards policies and procedures.

To settle the charges, the firm agreed to (i) a $2,500,000 fine and (ii) undertakings set forth in a side letter with the NFA.

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