NFA Issues Notice on Regulatory Obligations and Common Deficiencies for Swap Dealer Members - 10 March 2025

The National Futures Association (NFA) has issued Notice to Members I-25-06, providing important educational resources and updates on regulatory obligations and common deficiencies for Swap Dealer (SD) Members. The notice highlights key compliance areas, including annual filing requirements, marketing materials supervision, record-keeping, and risk management.

Key takeaways from the notice include:

• Updated Member Questionnaire: SD Members must now submit their Member Questionnaire annually and promptly update it whenever material changes occur.
• Record-Keeping Obligations: SD Members must maintain complete and accurate records of all swap transactions, ensuring compliance with CFTC Regulations 23.201 and 23.202.
• Marketing Materials Compliance: Firms using marketing materials (such as pitch decks and presentations) must implement supervisory programs to ensure compliance with NFA and CFTC rules.
• Market Practices and Trade Surveillance: Members must have supervisory procedures to prevent fraud, manipulation, and other abusive practices, including communication surveillance tailored to different languages and channels.
• Swap Data Reporting Requirements: SD Members must reconcile all open swap positions every 30 calendar days and correct reporting errors within seven business days or notify the CFTC Division of Market Oversight.
• Initial Margin (IM) Model Requirements: Firms using risk-based models for initial margin calculations must conduct regular validations and maintain strict compliance with CFTC Regulation 23.154.
• Capital Requirements Compliance: SD Members must maintain regulatory capital or tangible net worth as per CFTC Regulation 23.101(a) and conduct independent model validation.
• Risk Management Programs: Members must annually review and test their Risk Management Programs (RMPs) and ensure risk management units remain independent of trading operations.
• Swap Valuation Disputes Reporting: Firms must comply with NFA Interpretive Notice 9072, ensuring timely reporting of valuation disputes regardless of cross-border considerations.

NFA reminds members to stay informed and implement robust compliance measures to address these requirements effectively.

For more details, visit the NFA Member Notices page.