Regulations Establishing and Governing the Duties of Swap Dealers and Major Swap Participants

On April 3, 2012 the Commission adopted Commission regulations 23.600 (Risk Management Program), 23.601 (Monitoring of Position Limits), 23.602 (Diligent Supervision), 23.603 (Business Continuity and Disaster Recovery) 23.606 (General Information: Availability for Disclosure and Inspection), and 23.607 (Antitrust Considerations) pursuant to section 4s(j) of the Commodity Exchange Act (“CEA”). The above regulations adopted by the Commission would, among other things, require swap dealers (“SD”) and major swap participants (“MSP”) to develop a risk management program (including a plan for business continuity and disaster recovery and policies and procedures designed to ensure compliance with applicable position limits). The Commission believes that the information collection obligations imposed by the above regulations are essential to ensuring that swap dealers and major swap participants maintain adequate and effective risk management programs and policies and procedures to ensure compliance with position limits. Section 731 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act, Pub. L. No. 111-203, 124 Stat. 1376 (2010)) amends the Commodity Exchange Act (CEA) to add section 4s(j) which imposes certain duties upon swap dealers (SDs) and major swap participants (MSPs) as part of the overall business conduct regime to which they are subject. Among the obligations imposed by section 4s(j) are the requirements that SDs and MSPs: (1) establish risk management procedures adequate for managing their day-to-day business; (2) monitor their trading to prevent violations of applicable position limits; and (3) establish internal systems and procedures to obtain the information needed to perform their duties and to provide such information to the Commission. Accordingly, the Commission adopted regulations 23.600 (Risk Management Program), 23.601 (Monitoring of Position Limits), 23.602 (Diligent Supervision), 23.603 (Business Continuity and Disaster Recovery), 23.606 (General Information: Availability for Disclosure and Inspection), and 23.607 (Antitrust considerations) that require SDs and MSPs to develop a risk management program (including a plan for business continuity and disaster recovery and policies and procedures designed to ensure compliance with applicable position limits).

The latest form for Regulations Establishing and Governing the Duties of Swap Dealers and Major Swap Participants expires 2022-05-31 and can be found here.