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Federal Register / Vol. 86, No. 27 / Thursday, February 11, 2021 / Rules and Regulations
Existing 37.1307a delegates authority to the Director of DMO, or other staff as the Director may designate, to perform certain functions that are reserved to the Commission under the Core Principle 13 regulations, including reviewing the methodology used to compute projected operating costs.133

forth its corresponding duties.134
Among other responsibilities, the CCO
is required to ensure that the SEF
complies with the CEA and applicable rules and regulations, and is required to establish and administer required policies and procedures.135 Core Principle 15 also requires the CCO to prepare and file an ACR to the Commission.136 The Commission promulgated requirements under 37.1501 to implement these requirements.137
The Proposed Rules set forth several amendments to 37.1501 based on the Commissions experience since the part 37 implementation. These amendments streamline CCO requirements, allow SEF management to exercise discretion in CCO oversight, and simplify the preparation and submission of the ACR.

1. Proposed Rules
B. 37.1501aDefinitions
The Commission proposed to amend 37.1307a2 to additionally delegate the authority to review and make changes to the methodology used by a SEF to determine the market value of its financial resources under amended 37.1304 and the methodology that SEFs use to determine their wind-down costs under amended 37.1305. Further, the Commission would delegate the ability to request and receive the additional documentation related to calculation methodologies required under 37.1306c and receive required notifications of noncompliance under 37.1306e. The proposed amendments also include several additional technical amendments based on the proposed amendments to Core Principle 13
regulations, as described above.

Core Principle 15 requires the CCO to report directly to the SEFs board of directors or senior officer 138 and consult either to resolve conflicts of interest.139 Existing 37.1501a defines board of directors 140 but does not define senior officer. 141 In the SEF
Core Principles Final Rule, the Commission stated it would not adopt a definition of senior officer, but noted the statutory term would only include the most senior executive officer of the legal entity registered as a SEF.142

ii. Summary of Comments The Commission did not receive any comments on proposed 37.1306e.
iii. Final Rules The Commission is adopting 37.1306e as proposed. The Commission continues to believe prompt notification of noncompliance is necessary for it to perform its oversight functions and ensure market stability.
H. 37.1307Delegation of Authority
2. Summary of Comments The Commission did not receive any comments on the proposed delegations of authority.
3. Final Rules
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The Commission is adopting the additional provisions for delegation of authority as proposed. These delegation provisions will facilitate prompt and efficient determinations of the adequacy of SEF financial resources, consistent with the existing delegation authority under 37.1307a.
IV. Chief Compliance Officer Requirements A. Background and Overview of Proposed Rules Statutory Core Principle 15 requires each SEF to designate a CCO and sets 133 17

CFR 37.1307a.

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1. Proposed Rules The Commission proposed to relabel paragraph a as Definitions, and define senior officer as the chief executive officer or other equivalent officer of the SEF. The Commission stated defining senior officer would clarify the permissible reporting lines for the CCO and provide specificity to the Commissions proposed amendments to the Core Principle 15
regulations, as described below.143 The Commission also proposed additional, technical changes.
134 7 U.S.C. 7b3f15. The Commission codified Core Principle 15 under 37.1500. 17 CFR 37.1500.
135 7 U.S.C. 7b3f15Biv through v.
136 7 U.S.C. 7b3f15D.
137 17 CFR 37.1501.
138 7 U.S.C. 7b3f15Bi.
139 7 U.S.C. 7b3f15Biii.
140 Section 37.1501a defines board of directors as the board of directors of a SEF, or for those SEFs whose organizational structure does not include a board of directors, a body performing a function similar to a board of directors. 17 CFR
37.1501a.
141 17 CFR 37.1501a. The CEA likewise does not define the term senior officer in this context.
142 SEF Core Principles Final Rule at 33544.
143 83 FR 62023.

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2. Summary of Comments WMBAA supports the proposed amendments to add a definition of senior officer.144
3. Final Rules The Commission is adopting 37.1501a as proposed. The Commission continues to believe the definition of senior officer will clarify a CCOs permissible reporting lines consistent with Core Principle 15.
C. 37.1501bChief Compliance Officer Existing 37.1501bc set forth certain baseline requirements for the SEF CCO position. Commission regulation 37.1501bDesignation and qualifications of chief compliance officer requires a SEF to designate an individual to serve as the CCO; requires the CCO to have the authority and resources to help fulfill the SEFs statutory and regulatory duties, including supervisory authority over compliance staff; and establishes minimum qualifications for the designated CCO.145 Commission regulation 37.1501cAppointment, supervision, and removal of chief compliance officerestablishes the respective authorities of the SEF board of directors and senior officer to designate, supervise, and remove a CCO;
and requires the CCO to meet with the SEFs board of directors and regulatory oversight committee ROC on an annual and quarterly basis, respectively, and provide them with information as requested.146
1. Proposed Rules The Commission proposed to amend, clarify, or eliminate various existing requirements under 37.1501b and c and consolidate the remaining provisions into 37.1501b. The Commission proposed to eliminate rules that are duplicative of Core Principle 15, including requirements that a SEF
designate a CCO 147 and the CCO report directly to the board of directors or the senior officer.148 The Commission also proposed to eliminate the existing ROCrelated requirements from part 37.149
144 2019

WMBAA Letter at 23.
CFR 37.1501b.
146 17 CFR 37.1501c.
147 The Commission proposed to eliminate this requirement under existing 37.1501b1, which the Commission proposed to retitle Authority of chief compliance officer from Chief compliance officer required.
148 The Commission proposed to eliminate this requirement under existing 37.1501c2 because it is duplicative of statutory Core Principle 15.
149 These requirements include a mandatory quarterly meeting with the ROC under existing 145 17

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