CFTC Provides Time-Limited No-Action Relief from Certain Swap Data Reporting Requirements Pursuant to Parts 43, 45 and 46

in Broker-Dealers, Commodity Futures Trading Commission, Derivatives

By Eric Peterman and Adia Goss

Pursuant to a No-Action Letter dated April 9, 2013, the Commodity Futures Trading Commission (the “CFTC”) extended certain of the dates by which a swap counterparty that is not a swap dealer (“SD”) or major swap participant (“MSP”) must comply with its swap data reporting requirements, as set forth in Parts 43, 45 and 46 of the Commodity Exchange Act (the “CEA”).  As required by Title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), Part 43 establishes rules for the real-time public reporting of swap transaction data, Part 45 establishes swap data recordkeeping rules and rules for reporting swap transaction data to a registered swap data repository (“SDR”) and Part 46 establishes swap data recordkeeping and reporting rules for historical swaps.  Prior to the issuance of the No-Action Letter, the compliance date for such reporting requirements was April 10, 2013.  The new compliance dates are as follows:

  • For Counterparties that are not Financial Entities1
    • July 1, 2013 – interest rate swaps and credit swaps pursuant to Part 45 and Part 46, provided that, by August 1, 2013, the entity must backload and report to an SDR all swap transaction data from April 10, 2013 to July 1, 2013
    • August 19, 2013 – equity swaps, foreign exchange swaps and other commodity swaps pursuant to Part 45 and Part 46, provided that, by September 19, 2013, the entity must backload and report to an SDR all swap transaction data from April 10, 2013 to August 19, 2013
    • October 31, 2013 – historical swaps pursuant to Part 46
  • For Counterparties that are Financial Entities
    • April 10, 2013 – interest rate swaps and credit swaps pursuant to Part 45 and Part 46.2
    • May 29, 2013 – equity swaps, foreign exchange swaps and other commodity swaps pursuant to Part 45 and Part 46, provided that, by June 29, 2013, the entity must backload and report to an SDR all swap transaction data from April 10, 2013 to May 29, 2013
    • September 30, 2013 – historical swaps pursuant to Part 46

The CEA defines a counterparty as a “financial entity” if the counterparty is (i) a swap dealer, (ii) a security-based swap dealer, (iii) a major swap participant, (iv) a major security-based swap participant, (v) a commodity pool, (vi) a private fund as defined in the Investment Advisers Act, (vii) an employee benefit plan as defined in ERISA, or (vii) a person predominantly engaged in activities that are in the business of banking, or in activities that are financial in nature.  This definition does not include an entity whose primary business is providing financing and uses derivatives for hedging risks associated with interest rate and foreign currency exposure.  Also, the “clearing exemption” under the CEA exempts banks that have less than $10 billion in total assets as of the most recent fiscal year from the “financial entity” definition.

The No-Action Letter did not extend the compliance dates for recordkeeping obligations for non-SD/MSP counterparties, so records regarding any swap entered into by a non-SD/MSP counterparty prior to April 10, 2013 must be maintained by such counterparty in accordance with Part 46, and any swaps entered into on April 10, 2013 and after must be maintained in accordance with Part 43 and Part 45.  Also, in order to comply with the recordkeeping requirements of Part 45, a non-SD/MSP counterparty must obtain a CFTC Interim Compliant Identifier by April 10, 2013.

 


[1] Note that all compliance dates for counterparties that are not Financial Entities were extended.

[2] Note that this date was not extended by the No-Action Letter.

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