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A Storm of Inaction: New No-Actions Added to Dodd-Frank

On 26 June 2013, the CFTC issued four no-action letters, bringing the total for 2013 to 29.  Affecting substantive documentation/reporting issues for SD/MSP’s, a brief summary follows:

  • Extension of time-limited relief for SD/MSP’s obligation under § 45.4(b)(2)(ii) to report valuation data for cleared swaps. The relief expires on 30th June 2014.
  • Limited relief from the Regulation § 23.502 requirement that swap participants perform regular portfolio reconciliations. Applying to all SD/MSP’s, the letter identifies 11 data fields that may be excluded from the reconciliation process.
  • Relief for SD/MSP’s with respect to certain relationship documentation and external business conduct requirements under Regulation § 23.504. The letter applies to swaps that are intended to be executed and submitted for clearing at the same time. The specific relief varies according to the knowledge held about the counterparty.
  • Limited relief with respect to the certification of the Annual Report of SD Chief Compliance officers, required by Regulation 3.3. The letter also enumerates the subjects that must be addressed in the Annual Report .The relief is applicable to those SD’s that are not registered with the SEC and that ended their fiscal year on 31st March 2013.

Just over two years since it was signed into law, Dodd-Frank continues to be bedevilled by multiple uncertainties. While uncertainty may be said to be the lifeblood of the markets, lack of certainty in their regulatory framework only results in increased costs and supervisory self-sabotage.  These latest additions to an already long list of no-action letters serve to remind us that full and coherent Dodd-Frank implementation is still a distant target.

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