On 28 March 2014, the US Commodity Futures Trading Commission's ("CFTC") Division of Swap Dealer and Intermediary Oversight ("DSIO") issued an interpretation regarding the auditor independence requirements under Regulation 1.16 for certified public accountants conducting examinations of futures commission merchants ("FCMs"). The CFTC had previously issued a series of new and amended regulations requiring FCMs holding customer funds to implement enhanced customer protections to include risk management programs; internal monitoring and controls; capital and liquidity standards; customer disclosures; and auditing and examination programs (the "Customer Protection Rule"). In the Customer Protection Rule, the CFTC revised Regulation 1.16 to require, among other things, a certified public accountant's audit report of an FCM to state whether the audit was conducted in accordance with the auditing standards adopted by the Public Company Accounting Oversight Board ("PCAOB"). The CFTC also stated that the amendments to Regulation 1.16 would harmonize FCM audit requirements with the audit requirements for broker-dealers ("BDs") registered with the Securities Exchange Commission ("SEC"). In the interpretive guidance, the DSIO announced their view that a public accountant of an FCM will comply with the CFTC's Regulation 1.16 auditor independence requirements if such public accountant complies with the SEC and PCAOB audit independence requirements applicable to BDs.
The full text of the interpretive guidance is available at: http://www.cftc.gov/ucm/groups/public/@lrlettergeneral/documents/letter/14-40.pdf.
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