CFTC Staff issued guidance yesterday confirming that additional reporting lines for Chief Compliance Officers are possible.
Regulation 3.3 applies to FCMs and swaps registrant entities. It requires the Chief Compliance Officer of a registrant to report directly to its CEO or Board. The intention of this requirement is to assure the CCO’s independence from the business unit.
Larger institutions, which may have layers of management at the parent level above the registrant, sought assurance that their CCOs could have additional reporting lines outside of the registrant. The Staff noted possibilities such as the registrant’s CCO reporting to a global CCO of the parent company or to another senior officer responsible for multiple of the parent’s lines of business. Each of these arrangements is not foreclosed, noted the Staff, but whether they comply with the rule will depend on “all relevant facts and circumstances.”