CFTC Issues No-Action Relief Providing an Alternative to Fingerprinting to Establish Fitness of Principals Residing Outside the United States

The CFTC's Division of Swap Dealer and Intermediary Oversight (DSIO) announced the issuance of the attached no-action letter relating to the fingerprinting requirement under CFTC Rule 3.10(a)(2) for certain principals of CFTC registrants. The no-action letter is in response to requests from market participants for relief from the fingerprinting requirement for principals of CFTC registrants where the principals have not resided in the United States since reaching 18 years of age (Non-U.S. Principals).

Specifically, the no-action letter provides that DSIO will not recommend an enforcement action against a registrant based solely upon the registrant's failure to submit with its application for registration fingerprints on a fingerprint card provided by the NFA for each Non-U.S. Principal, provided that the registrant:

(1) lists each Non-U.S. Principal on its application;(2) submits a Form 8-R for each Non-U.S. Principal with a "certification" that includes the information described below; and (3) notifies the NFA within 30 days after the filing of a Form 8-R that it has not submitted a fingerprint card for each Non-U.S. Principal.

For purposes of this no-action relief, the referenced "certification" must be signed by a person with authority to bind the applicant and is required to state that: (1) a reasonable criminal history background check was conducted using a reputable commercial service; and (2) the criminal history background check did not reveal any matters that constitute a disqualification under Sections 8a(2) or 8a(3) of the Commodity Exchange Act, other than those disclosed. The no-action relief is also subject to compliance with the condition that the registrant keeps a copy of the certification, together with all supporting documents, pursuant to Commission Regulation 1.31.

The no-action letter further advises that DSIO intends to continue to explore alternatives to the fingerprinting requirement in the context of Non-U.S. Principals, and that it might in the future revisit the process detailed in the no-action relief without prejudice to registrants who may already have availed themselves of the relief provided in this no-action letter.

See: CFTC Letter 12-49: Commission Regulation 3.10(a)(2); No-Action. See also: CFTC Provides Very Limited No-Action Relief to Swap Dealers' Associated Persons Subject to Statutory Disqualification (with Lofchie Comment)