CFTC No-Action Relief for Swap Dealers for Chief Compliance Officers' Annual Reports as of 2012 Year-End (with Lofchie Comment)

The CFTC's Division of Swap Dealer and Intermediary Oversight (DSIO) issued a no-action letter providing certain swap dealers with limited relief surrounding the requirement that chief compliance officers of such swap dealers prepare and submit an annual report, pursuant to Commission Regulation 3.3. The relief is applicable to all swap dealers that: (1) are required to register by December 31, 2012; (2) are currently regulated by a U.S. prudential regulator or are registrants of the SEC; and (3) have a fiscal year-end of December 31, 2012 (Covered Firms).

According to the letter, the Division will not recommend that the CFTC take an enforcement action against a Covered Firm, or a chief compliance officer of a Covered Firm, for failing to prepare an annual report and furnish such report to the CFTC for the fiscal year that ends on December 31, 2012. The no-action relief is limited only to the annual report required to be furnished by a Covered Firm to the CFTC for the fiscal year that ends on December 31, 2012.

Cross-Reference(s): CFTC Rule 3.3 [Chief Compliance Officer].

Lofchie Comment: Given that it is currently required that certain firms register as swap dealers on December 31, the no-action letter was required so that firms were not required to prepare an annual compliance report for the one day that they were registered. While it is good that the no-action letter was issued, it would be better to simply push back the registration requirement into January. As we have said several times before in the newsletter, having a registration requirement on the last day of the year simply is not good regulatory planning because, among other things, it generates a requirement for "year-end" reports that cover only a single day.

See: CFTC Letter 12-52. Related news item: CFTC Issues No-Action Relief for Certain FCMs Concerning Annual Reports of CCOs