CFTC Finds Reverse Gear. Again.
On 27 September the Commodity Futures Trading Commission (CFTC) issued a further 3 no-action letters – this time in relation to swap execution facilities (SEFs).
CFTC Letter No. 13-55 provides no-action relief to extend the date on which a SEF must comply with certain swap data reporting requirements under Part 43 (real-time public reporting of swap transaction data to registered swap data repositories (SDRs)) and Part 45 (which requires SEFs and designated contract markets (DCMs) to report ‘swap creation data’, such as primary economic terms to SDRs) of the CFTC’s regulations.
The reporting obligations were due to commence at 12:01 Eastern Standard Time on 2 October 2013. However, no-action relief will be granted:
- for FX swaps: until 12:01 Eastern Standard Time on 30 October 2013; and
- for equity and commodity swaps: until 12:01 Eastern Standard Time on 2 December 2013.
However, the no-action relief is conditional. Broadly, the conditions are that:
- the counterparty reports the required data to an SDR by the required deadline; or
- if this is not possible, the SEF ‘backloads’ the trade data as soon as possible and no later than:
- 2 December 2013, in the case of FX swaps; and
- 2 January 2014, in the case of equity and commodity swaps; and
- in either case, the SEF:
- implements record retention procedures with respect to transactions which have not been reported; and
- notifies the CFTC within 10 days of its intention to rely on the no-action relief, providing detail as to its current reporting capabilities and an approximate timeframe to become compliant.
The CFTC is providing no-action relief to “Reporting Counterparties” from the requirement to report ‘swap continuation data’ for certain uncleared swaps that are executed on, or pursuant to, the rules of a SEF. Broadly, the relief is being granted due to the comments received from the industry that a Reporting Counterparty’s ability to fulfil its continuation data reporting obligations depends, in part, on the ability of a SEF to first fulfil its regulatory obligations with respect to the reporting of ‘swap creation data’ – an issue with which the SEFs are having ongoing operational challenges.
The no-action relief is extended until the earlier of:
- such time as the Reporting Counterparty can fulfil its continuation data reporting obligations; and
- with respect to:
- FX swaps: 29 October 2013; and
- Equity and Commodity swaps: 1 December 2013.
However, relief is provisional on the Reporting Counterparty informing the SEF of the circumstances which prevent it from complying with its reporting obligations and retaining records of all affected transactions.
The CFTC is providing no-action relief until 12:01 Eastern Standard Time on 1 November 2013 with respect to requirements that SEFs establish and enforce compliance with their rules, which were originally due to come into force on 2 October 2013. This is mainly due to comments received from the industry that SEF participants have not had adequate time to review SEF rules and so construct their own policies and procedures which will assist them in compliance with SEF rule books.
 As defined in S 45.1 of the CFTC’s regulations