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Better Late Than Never: CFTC Consults on Swap Data Reporting Rules

Better Late Than Never: CFTC Consults on Data Reporting Rules

Long aware of the need to improve its data collection and quality standards, on 19 March 2014 the Commodity Futures Trading Commission (CFTC) published a request for public comment on Part 45 of its Swap Data Reporting rules.

Part 45 requires the real-time reporting of swap transaction data, in relation to both cleared and uncleared swaps, to swap data repositories (SDRs), a requirement which finds its roots in Section 727 of the Dodd-Frank Act which created a new section 2(a)(13) to the Commodity Exchange Act.  The request for comment remains open for 60 days and seeks public input on approximately 70 issues, including:

  • The terms of a swap confirmation that constitute “confirmation data”;
  • How to ensure the timely, complete and accurate reporting of “continuation data” (i.e. data resulting from swap life cycle events) and valuation data;
  • Approaches to a change of status of a reporting counterparty;
  • Clarification of the appropriate manner to report swap transactions of a type not explicitly addressed in the swap data reporting rules;
  • Standardisation of data elements, particularly those relating to bespoke, exotic or complex swaps;
  • Challenges associated with the reporting of:
    • Allocations;
    • Compressions;
    • Prime brokerage swaps; and
    • Commodity trade options;
  • Approaches to addressing duplicative reporting;
  • Reporting of inter-affiliate relationships;
  • Identification of reporting entities which are not in compliance with swap data reporting rules as a result of reliance on no-action relief;
  • Challenges associated with “Post-Price Swaps”;
  • Reporting of combinations of swap transactions forming strategies and packages;
  • Challenges in reporting Primary Economic Terms data  and collateral information;
  • The reporting of cleared swaps;
  • The affirmative steps, if any, that SDRs should take to verify the accuracy of swap data;
  • Challenges associated with obtaining and maintaining an LEI; and
  • Further methods by which the CFTC could enhance Part 45 to facilitate oversight of Swap Dealers, Major Swap Participants, risk monitoring and surveillance.

Credit where credit is due.  The CFTC experienced a torrid time getting to grips with swap reporting under Dodd-Frank, but is exhibiting a refreshing willingness to learn the lessons of the past.  The consultation attempts to drill down to the level of detail needed in order to make swap transaction reporting operationally feasible, tackling such gnarly issues as who ‘owns’ swap data submitted to, or transferred by, an SDR.  With luck, at the end of the process, the industry will have a template from which other regulators which have yet to tackle such difficult questions (ESMA take note) may also benefit.


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