DSIO issues follow-up statement concerning annual compliance report requirements - 24 February 2020

The Division of Swap Dealer and Intermediary Oversight acknowledged that its December advisory has presented challenges for chief compliance officers seeking to adapt existing reporting procedures for 2020 submissions.

In an apparent effort to alleviate concerns among registrants required to file a Chief Compliance Officer Annual Report, DSIO Director Joshua Sterling has issued a statement regarding the Division’s December 2019 advisory which had focused on numerous deficiencies observed by Division staff after a 2018 final rule and guidance on the topic.

In his current statement, Sterling clarified that the December advisory constituted mere guidance and did not impose any new requirements upon registrants. Consequently, the director indicated that the DSIO will expect chief compliance officers (CCOs) to take reasonable measures to implement the advisory’s recommendations when preparing their annual compliance reports for 2019. Moreover, Sterling noted that DSIO recognized that CCOs may not be able to implement those recommendations fully for their 2019 reports given the potential timing constraints. However, Sterling added that DSIO will expect that CCOs will be able to more fully consider the advisory recommendations when preparing their 2020 annual reports, which will be due in 2021.

According to the DSIO, the December advisory was issued in order to assist in the preparation of the Chief Compliance Officer Annual Report for FCMs. The advisory identifies a number of deficiencies based on DSIO staff's review of reports submitted for the 2018 fiscal year. Some of staffs concerns related to the following:


areas for improvement;


material noncompliance issues;


financial, managerial, operational, and staffing resources;


the certification requirement; and


furnishing the annual report.

In his statement, Director Strong noted that the Division considers the annual report to be targeted in scope and to reflect certain iterations in the Division’s thinking about how annual compliance reports can be more effective. He added that it is based on the Division’s years of experience in reviewing reports submitted by registrants.

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