On December 22, 2014, the Division of Swap Dealer and Intermediary Oversight (“DSIO”) of the Commodity Futures Trading Commission (“CFTC”) issued an Advisory providing guidance regarding the contents of chief compliance officer (“CCO”) annual reports required to be submitted to the CFTC by futures commission merchants (“FCMs”), swap dealers (“SDs”), and major swap participants (“MSPs”) (collectively, “registrants”). CCO annual reports must be (i) furnished to a firm’s Board of Directors (“Board”) or senior officer prior to submission to the CFTC, (ii) certified by the CCO or the firm’s chief executive officer, and (iii) contain information specified in CFTC Regulation 3.3(e), 17 C.F.R. 3.3(e). Based on CFTC staff review of CCO annual reports submitted in the first year, the Advisory provides guidance and recommendations for best practices with respect to future annual report filings and Reg. 3.3(e)’s content requirements. While DSIO emphasizes that the Advisory is not intended to create new regulatory requirements, and the recommendations and best practices in the Advisory need not be used if the CCO does not believe they will improve the annual report, DSIO will expect most FCMs, SDs, and MSPs to incorporate its recommendations into their CCO annual reports.

Among other recommendations, the Advisory suggests that the CCO annual report should include a summary chart to display information addressing various requirements and includes a sample chart. However, DSIO states that, while charts may be appropriate to efficiently display information, they are not a substitute for a complete and substantive discussion of the material issues that must be addressed in the annual report to fully inform the Board or senior officer regarding the registrant’s compliance program. The extended discussion of such charts in the Advisory, though, suggests that staff prefers to see such charts in the annual report. CFTC staff uses regulatory charts in other contexts (e.g., Form DCM, Exhibit L requires a regulatory chart in a contract market designation application) because they assist staff in conducting their review, which appears to be the motivation here. Some information that DSIO suggests may be useful to be displayed in chart form includes...