NFA reminded member firms that March 1, 2020 is the compliance date for certain customer information and risk disclosure requirements for cleared swaps.
As previously covered, NFA amended the following:
- NFA Compliance Rule 2-8 ("Discretionary Accounts") to (i) include the word "customer" in the rule title to demonstrate more clearly that the rule is applicable to customer accounts and not to a member's principal-to-principal activities and (ii) improve recordkeeping requirements to provide that any entity exercising discretionary authority over an account must be identified; and
- NFA Compliance Rule 2-30 ("Customer Information and Risk Disclosure") and the related Interpretive Notices to (i) apply customer information and risk disclosure requirements to cleared swaps and (ii) require members to obtain customer information and present the appropriate risk disclosures to non-eligible contract participants prior to allowing them to trade cleared swaps.
Additionally, NFA modified Interpretive Notice 9029 - NFA Compliance Rule 2-10 ("The Allocation of Bunched Orders for Multiple Accounts") to:
- widen the scope of the Interpretive Notice to include bunched orders involving cleared swaps;
- clarify that the trading programs' quarterly reviews conducted by an Eligible Account Manager must be able to demonstrate that the allocation method was "fair and equitable";
- reiterate that a bunched order's average price may be rounded to the nearest price increment supported by the relevant clearinghouse; and
- modify the language to better align with CFTC Rule 1.35's delineation between the requirements for (i) Eligible Account Managers and (ii) futures commission merchants and introducing brokers in certain activities.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
