DSIO is run by a Director, who is assisted by the DSIO Deputy Directors and Chief Counsel. Tom Smith is the Acting Director, and the Deputies and their respective branches are as follows: Mr. Smith, who also serves as Deputy Director of Capital, Margin and Segregation; Erik Remmler, Deputy Director of Registration and Compliance; and Kevin Piccoli, Deputy Director of Examinations. Frank Fisanich is the DSIO Chief Counsel.
DSIO has 89 employees, who are located in the CFTC’s Washington, D.C. Headquarters and in the regional offices in Chicago, Kansas City and New York.
DSIO oversees compliance with the Commission’s registration and follow-on regulations applicable to intermediaries. For example, DSIO assesses and monitors intermediaries’ compliance with requirements for: capital, margin, and customer asset segregation; customer protection; internal and external business conduct standards; and reporting, disclosure, and recordkeeping.
DSIO’s oversight program is designed to ensure that these intermediaries are financially sound and meet standards for fitness and conduct as set forth in the Commodity Exchange Act and the Commission’s regulations.
Regular examinations of registrants are undertaken by the self-regulatory organizations (such as the National Futures Association (NFA) and Chicago Mercantile Exchange Inc. (CME)) to which the CFTC has delegated certain authority. However, DSIO staff undertakes examinations directly of registrants periodically.
DSIO has full access to exchange trade data. However, market surveillance is primarily undertaken by the Commission’s Division of Market Oversight. For purposes of assessing regulatory compliance and the financial risk that intermediaries such as swap dealers or futures commission merchants may pose to the market, DSIO uses a combination of notices and reports required to be filed by the intermediaries, data received from derivatives clearing organizations and swap data repositories, information gathered by NFA, and information received from discussions with and examinations of the registrants.
What is the internal process of DSIO in the case it finds registrant activity which it deems an issue:
DSIO will typically investigate non-compliance or registrant risk issues by reviewing the available sources of information and through lengthy discussions with the registrants and with the appropriate self-regulatory organizations that have oversight responsibility over the registrants. DSIO may also engage in discussions with other regulators, such as the U.S. Securities and Exchange Commission, if there is overlapping jurisdiction. In addition, DSIO may refer the matter to the Commission’s Division of Enforcement for further review.
DSIO works very closely with the other CFTC divisions and offices, on a daily basis, by exchanging expert assistance and advice on those areas for which DSIO and the other divisions and offices are responsible.
Does DSIO only look at intermediaries involved with exchange traded products or are intermediaries involved with OTC products reviewed as well:
DSIO reviews the activities of all intermediaries subject to the CFTC’s jurisdiction, regardless of whether an intermediary is involved with on-exchange or off-exchange trading. These intermediaries include introducing brokers, futures commission merchants, floor traders, floor brokers, associated persons, commodity trading advisors, commodity pool operators, swap dealers, and major swap participants.
Yes, it does. DSIO routinely receives and responds to queries from the general investing public, via telephonic, electronic, and formal written means regarding the intermediaries it regulates and their activities.
DSIO works very closely with NFA and other self-regulatory organizations. DSIO oversees and examines NFA and other designated self-regulatory organizations (DSROs), which in turn implement the registration, examination, and surveillance of registrants, as delegated by the Commission. DSIO also reviews all NFA rule and rule amendments submitted to the Commission for review or approval.
Yes, see above.
Does DSIO make direct contact with futures commission merchants (FCMs), introducing brokers (IBs), brokers or traders and if so is there a typical reason:
DSIO engages in almost daily contact with registrants, including FCMs, IBs and brokers. This contact includes providing information regarding the operation of Commission regulations and other requirements impacting registrants. DSIO also may engage in direct contact with registrants in the course of routine and “for cause” examinations, regulatory issue reviews and in connection with self-reported compliance matters. As one example, DSIO may undertake an examination if DSIO has learned that an FCM is undersegregated or undercapitalized.
N/A; DMO is responsible for market oversight.
DSIO staff is very much involved in developing regulations on issues relating to intermediaries. Division staff actively participated in drafting many of the regulations the Commission adopted pursuant to the Dodd-Frank Act. For example, DSIO drafted the regulations on registration and on business conduct standards for swap dealers. DSIO also is responsible for drafting and revising regulations in such areas as customer protection and managed funds. In addition, DSIO staff is also very involved in responding to requests from intermediaries for exemptive, no-action, and interpretative relief.
Yes. DSIO staff is available to field general questions, which are routed to the staff member with expertise in the area in which the question arises. Staff responds to numerous requests for information as part of their normal responsibilities.
DSIO staff generally consists of college graduates, and many of the staff have advanced degrees. Staff includes attorneys, CPAs, accountants, auditors, and financial analysts – most of whom had financial services experience prior to joining the CFTC.