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Regulation and Compliance > State Regulation

CFTC Compliance Branch Releases Its First-Ever Exam Priorities List

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The Compliance Branch of the Division of Market Oversight for the Commodity Futures Trading Commission has published, for the first time, its exam priorities for the year.

The DMO plans to focus on cryptocurrency, disruptive trading, trading practices, block trades, markets, market maker and trading incentive programs, and relationships with service providers.

The Compliance Branch has historically conducted exams through Rule Enforcement Reviews of designated contract markets (DCMs) to monitor their compliance with the Commodity Exchange Act and CFTC regulations.

The 2019 exams will target specific elements of a DCM’s self-regulatory program and more focused time periods, the branch states, with most of its regulated entities undergoing at least one exam this year.

CFTC expects that the DMO will announce exam priorities every year to enhance industry communication, prioritize risk-based areas of concern, pursue continuous improvement and create efficiencies.

Todd Cipperman, head of Cipperman Compliance Services, told ThinkAdvisor on Thursday that advisors and broker-dealers that trade futures are subject to registration with the National Futures Association.

The NFA is the self-regulatory organization for CFTC regulation “much like the role FINRA plays for broker-dealer regulation,” Cipperman said.

“Although the CFTC regulates the markets and venues (much like the SEC), the NFA will follow its lead with respect to examination priorities,” Cipperman added.

Advisors and broker-dealers registered as commodity trading advisors or commodity pool operators “should re-examine their compliance policies and procedures governing cryptocurrency, trading practices and service provider oversight.”

The NFA, he adds, “is yet another regulator with which such advisors and broker-dealers must contend.”

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