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Footnote 195- last chance saloon now open for drinks

The CFTC yesterday extended relief originally granted by 14 August 2014’s No-Action Letter 14-108, granting relief for SEFs with respect to recordkeeping and confirmation obligations for uncleared swaps. Readers will recall that 14-408 had two branches:

  • delayed enforcement of requirements laid down by Commission Regulation 37.6(b)- that a SEF “provide each counterparty to a transaction…with a written record of all the terms of the transaction”. Footnote 195 to the preamble of the final part 37 rules clarified that confirmations may incorporate previous agreements by reference provided that such agreements had been submitted to the SEF ahead of execution.
  • delayed enforcement of Regulations 37.1000, 37.1001 and 45.2(a), which variously require SEFs to maintain a copy of all records referenced in confirmations.

The extension also adds no-action relief for Regulation 45.3(a) in respect of failure to report 37.6(b) “referenced”data to an SDR. The extended relief will expire at 11.59pm, Eastern Daylight Time on 31 March 2016.

Despite intense and prolonged industry lobbying the CFTC seems determined to stand its ground on this issue. They see potentially significant benefits to both regulators and the regulated in fully embracing this set of rules,  and the industry pushing back on the basis of cost, complexity or regulatory overreach may only be serving to delay the inevitable.  Time will tell whether the market uses this further 6 months grace to switch its focus to compliance.

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