Adaptation of CFTC Regulations to Incorporate Swaps - Comment Letter - National Futures Association - August 8, 2011

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Adaptation of CFTC Regulations to Incorporate Swaps
August 8, 2011

In their comment letter, the NFA addresses the following concerns:

(From the comment letter)

  • First, if, as the Commission states, its intent is to harmonize Commission Regulation 1.35 with proposed Regulation 23,202 (a)(1), the record keeping rule for swap dealers, the broad application of the proposed amendments to Regulation 1.35 would seem to have the opposite effect.
  • Secondly, the Commission’s estimate of the costs of recording and retaining all oral communications in any way related to the execution of an order focuses exclusively on the costs of procuring and operating an appropriate recording system. The release does not address the industry wide costs of retaining those recordings for five years under the standards proposed by the Commision.
  • Finally, [the NFA] note that the Commission indicates that the proposed amendments to Regulation 1.35 are intended to address Commission case law finding that tape recordings of customer telephone conservations made by registered firms are beyond the scope of Regulation 1.35… While the NFA recognizes that audio recordings are useful to the Commission in enforcement proceedings, they believe that this can be accomplished without "imposing sweeping new obligations on all registered FCMs, RFEDs, and IBs."


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