SIFMA Submits Comments to the CFTC Requesting Additional Relief for Requirements Under the Internal Business Conduct Rule (with Lofchie Comment)

SIFMA submitted comments to the CFTC requesting additional no-action relief from certain recordkeeping requirements under Subpart F of the Internal Business Conduct Rule.

In the letter, SIFMA requests that the CFTC's Division of Swap Dealer and Intermediary Oversight confirm it will not recommend that the CFTC take enforcement action against a firm not in compliance with certain requirements of Subpart F described in this letter. More specifically, SIFMA's requests were that:

• the CFTC not take any enforcement action against any firm not in compliance with the requirement to record (a) landline telephone conversations of substantially all relevant personnel involved in swaps and/or related cash or forward transactions located outside of the U.S. and (b) mobile telephone conversations of substantially all relevant personnel involved in swaps and/or related cash or forward transactions, whether located within or outside of the U.S., in each case, until December 21, 2013;
• the CFTC not take any enforcement action against any firm not in compliance with the requirement to create quotation, execution and confirmation timestamps in "UTC" (co-ordinated universal time) in legacy systems that record time data in an alternative format until such time as such firm is reasonably able to modify its legacy systems to provide the capability to record time data in UTC. During such interim period, the Division should allow a firm to provide the data by any reasonable method;
• the Division clarify through interpretive guidance that firms may satisfy the obligation to maintain transaction records in a manner identifiable and searchable by transaction and counterparty through reliance upon existing search capabilities in the relevant systems as well as an element of manual searching after the record has been created; and
• the CFTC not take any enforcement action against any firm not in compliance with (a) the requirement to maintain all records required pursuant to CFTC Regulation 23.203 at the principal place of business of the firm or such other principal office as shall be designated by the firm until a reasonable time after further interpretive guidance has been provided by the CFTC and/or (b)CFTC Regulation 1.31 until the latter of (i) December 21, 2013 or (ii) the applicable compliance date of any forthcoming rulemaking amending CFTC Regulation 1.31.

Lofchie Comment: When market participants must request regulatory relief so as to be excused from regulatory responsibilities that are technologically impossible to fulfill, the regulatory system is not working.

Click hereto view letter in full (links externally to SIFMA website).Related News Item: CFTC Issues Time-Limited No-Action Relief Regarding Certain Recordkeeping Obligations (with Lofchie Comment)(October 26, 2012).Cross-Reference(s): CFTC Letter No. 12-29 and Swap Dealer and Major Swap Participant Recordkeeping, Reporting, and Duties Rules; Futures Commission Merchant and Introducing Broker Conflicts of Interest Rules; and Chief Compliance Officer Rules for Swap Dealers, Major Swap Participants, and Futures Commission Merchants; Final rule(77 FR 20128).