December 11, 2012

Division of Swap Dealer and Intermediary Oversight

Re: No-Action Relief: Alternative to Fingerprinting to Establish Fitness of Principals

Residing Outside the United States

This letter is in response to requests from market participants received by the Division of

Commission (“Commission”) seeking relief from the fingerprinting requirement for principals of

fitness check for that principal.

Commission Regulation 3.10(a)(2) requires that an application for registration submitted

by a futures commission merchant, retail foreign exchange dealer, introducing broker,

commodity pool operator, commodity trading advisor, swap dealer, major swap participant or

leverage transaction merchant be accompanied by a Form 8-R for each natural-person who is a

principal of the applicant, together with the fingerprints of that principal on a fingerprint card

provided by the National Futures Association (“NFA”) for that purpose (the “Fingerprint

Requirement”). NFA sends digital images of the fingerprints to the Federal Bureau of

Investigation (“FBI”) to determine if the individual who submitted them has a criminal record.

See, e.g., Commission Regulation 3.21(c), under which any futures commission merchant, retail foreign

exchange dealer, introducing broker, commodity trading advisor, commodity pool operator or leverage transaction

merchant that has a principal who is an outside director may, in lieu of submitting a fingerprint card, file a notice

with the Commission that such outside director meets certain requirements, including that such outside director is

not engaged in solicitation. Commission regulations are found at 17 C.F.R. Ch. I (2012) and may be accessed

through the Commission’s website, www.cftc.gov.

2

diminished outside the United States, where various national and regional law enforcement

agencies have widely varying capabilities in terms of the information they are able to provide

and the promptness with which they can provide it. The lack of a single fingerprint record

repository outside of the United States (analogous to the FBI) further decreases the utility and

efficiency of collecting fingerprints for purposes of conducting background fitness checks of

persons residing abroad. As a result, NFA only submits the fingerprints to the FBI.

In addition, concerns have been raised by the industry that, in other jurisdictions,

requiring the submission of fingerprints may contravene privacy laws, and that in the context of a

the Division believes that an applicant for registration should be permitted to comply with

Commission Regulation 3.10(a)(2) with respect to a Non-U.S. Principal by submitting either a

fingerprint card or a certification, signed by a person with authority to bind the applicant, that a

reasonable criminal history background check using a reputable commercial service was

conducted; such criminal history background check did not reveal any matters that constitute a

disqualification under Sections 8a(2) or 8a(3) of the Commodity Exchange Act (“Act”)

than those disclosed; and that the applicant shall maintain, in accordance with Commission

Regulation 1.31, records documenting that such criminal history background check was

its application for registration a fingerprint card for each Non-U.S. Principal, provided that the

registrant lists each Non-U.S. Principal on its application, submits a Form 8-R each Non-U.S.

Principal with the certification described above, and notifies NFA within 30 days after the filing

of a Form 8-R that it has not submitted a fingerprint card for each Non-U.S. Principal. This

position is, however, subject to compliance with the condition that the registrant keeps a copy of

the certification, together with all supporting documents, pursuant to Commission Regulation

1.31. The Division notes that it will continue to explore alternatives for the Fingerprint

Requirement in the context of Non-U.S. Principals, and that in the future it may revisit the

process set forth in this letter (without prejudice to registrants who may already have availed

themselves of the relief provided herein).

17 C.F.R. 3.1.

7 U.S.C. 12(a)(2) and (3).

3

The no-action relief provided herein contains a collection of information, as that term is

defined in the Paperwork Reduction Act.

obtained from the Office of Management and Budget. In accordance with 44 U.S.C. §

3506(c)(2)(A) and 5 C.F.R. §§ 1320.8 and 1320.10, the Division will, by separate action, prepare

an information collection request for review and approval by OMB, and will publish in the

Federal Register a notice and request for public comments on the collection burdens associated

with the no-action relief. If approved, a Commission registrant may not rely on the Division’s

determination not to recommend an enforcement action to the Commission unless the

Commission registrant provides the information the Division has determined is essential to the

position taken herein represent the views of this Division only, and do not necessarily represent

the views of the Commission or of any other office or division of the Commission.

If you have any questions concerning this correspondence, please contact Katherine

Driscoll, Associate Director, at (202) 418-5544 or Christopher Cummings, Special Counsel, at

(202) 418-5445.

Very truly yours,

Director,

Division of Swap Dealer

and Intermediary Oversight

44 U.S.C. § § 3501 et. seq.