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CFTC DSIO Director Reviews Compliance and Supervisory Issues for 2020

CFTC Division of Swap Dealer and Intermediary Oversight ("DSIO") Director Joshua B. Sterling reviewed "key supervisory considerations" that will be addressed in the upcoming year.

In a speech at the Institute of International Bankers Risk Management and Compliance Seminar, Mr. Sterling urged firms to avoid "slippage" in compliance, warning firms that non-compliance is not a worthwhile risk.” Mr. Sterling said any slippage of this sort could stem from "shortcomings in management's tone about the importance of following through on compliance obligations." Mr. Sterling said that he would be working with his CFTC colleagues to ensure that this type of consideration is not done, and instead, that compliance is focused on "following through, every day, on what [the CFTC] rules require."

Mr. Sterling also highlighted the following substantive areas of focus for 2020: (i) on cross-border matters, he indicated that DSIO is working on a proposal based on "practical considerations" to formalize the CFTC approach to cross-border swaps regulation; (ii) he said that the CFTC likely will recommend that the Commission re-open the comment period regarding final rules on capital requirements; and (iii) ensuring that the CFTC addresses potential "congestion" issues associated with the Phase 5 implementation for uncleared swaps margin. In addition, Mr. Sterling noted a number of issues that the CFTC is staff is addressing relating to Brexit and the LIBOR transition, including how those events are treated under CFTC margin requirements.

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