NFA Reminds SDs and MSPs of Requirements Regarding Departure of CCOs (NFA Notice I-14-17) (with Lofchie Comment)

The National Futures Association ("NFA") issued a notice to remind members of the obligations of swap dealers ("SDs") and major swap participants ("MSPs") following the departure of chief compliance officers ("CCOs").

According to the notice, CFTC Rule 3.3 requires each SD and MSP to designate an individual to serve as its CCO. Upon the departure of a CCO due to resignation or replacement, an SD or MSP is required to submit a Form 8-R identifying the new CCO as a principal of an SD or MSP. The SD or MSP should update the compliance contact in the NFA's Online Registration System.

Additionally, the notice specifies, if the former CCO is no longer acting in the capacity of a principal in accordance with CFTC Rule 3.1(a), then the SD or MSP is required to submit a Form 8-T terminating the former CCO as a principal of the SD or MSP within 30 days of the CCO's departure.

The SD or MSP is required to maintain appropriate documentation that designates a new individual to serve as the CCO. The notice recommends that a firm contact a representative of the OTC Derivatives Department to inform the NFA of a change or upcoming change in the firm's CCO.

Lofchie Comment: Firms should be aware that any change in a CCO is likely to trigger at least a few inquiries from the regulators about whether the departure was caused by a disagreement concerning how to respond to a compliance issue.

See: NFA Notice I-14-17.