CFTC Provides Guidance to Markets on Calculating DCM and SEF Operating Costs

The CFTC Division of Market Oversight issued guidance for designated contract markets ("DCMs") and swap execution facilities ("SEFs") on the calculation of projected operating costs. The guidance concerns the costs of complying with (i) DCM Core Principle 21 and CFTC Rule 38.1101(c), and (ii) SEF Core Principle 13 and CFTC Rule 37.1303, which together require both kinds of entities to maintain sufficient financial resources to cover their annual operating costs.

The CFTC stated that a DCM or SEF has "reasonable discretion in determining the methodology used to calculate projected operating costs." The agency clarified that (i) the calculation must include all expenses for compliance with CFTC requirements, and (ii) the quarterly financial reports of a DCM or SEF must contain explanations of all expenses that either have been excluded or prorated in determining the calculation.