CFTC Division of Swap Dealer and Intermediary Oversight (the "Division") Director Matthew Kulkin described the agency's efforts to reduce costs of compliance and improve market quality. In a speech before the New York City Bar Association, Mr. Kulkin addressed the Division's efforts in the context of the CFTC Operation Kiss initiative to review CFTC rules and related guidance.

As to reducing compliance costs, Mr. Kulkin highlighted Division efforts to:

  • "streamline" the process for Chief Compliance Officer Duties and Annual Reports;
  • reduce compliance burdens for swap-dealer segregation notices;
  • provide exemptions from the requirement for a self-regulatory organizations to include futures commission merchants ("FCMs") in its financial surveillance program; and
  • propose to codify certain CPO and CTA staff letters.

Mr. Kulkin listed recent proposals to improve market quality, including:

  • providing exemptions to the swap-dealer registration regime to allow more insured depository institutions to join the swap market without registering as dealers;
  • allowing prime brokers to be a source of liquidity in swaps by reducing the burden of pre-trade disclosure obligations; and
  • issuing guidance to prevent market disruption in the event of a no-deal Brexit.

Additional recommendations to improve market quality under consideration include:

  • helping registered floor traders provide swap liquidity by not requiring them to register as swap dealers;
  • allowing FCMs to hold certain customer funds in Euro-denominated sovereign securities; and
  • considering how to limit the potential market disruption caused by the implementation of initial margin "Phase Five."

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