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Tomorrow, 30 July 2014, marks the expiry of CFTC No-Action Letter 13-41[1]. The letter granted a one year extension, with modification, to Letter 12-46 permitting Part 20 reporting parties to mask identifying information for trades affected by 3rd country privacy laws. Penalties for privacy infringement vary by country ranging from a 500,000 yuan in the People’s Republic of China, to up to five years imprisonment in South Korea. Banks may be forgiven for at least considering non-compliance with their own domestic legislation. European banks have faced an analogous dilemma since the advent of trade reporting under EMIR, a last-minute 11 February 2014 ESMA Q&A clarified that there can be no exceptions to the Article 9(5) identity-reporting mandate. Of the 14 affected countries[2], the following four countries have particularly stringent privacy regulations:


Equivalent Domestic Law Required Monetary Authority Consent Required Counterparty Consent Required Fine >| Removal of Licence Criminal Sanction for Natural persons
South Korea N Y- per transaction N $97,500 Y Y >| 5 yrs.
Switzerland Y N N $1.23m N Y >| 3 yrs.
People’s Republic of China Y Y N $80,150 Y N
Singapore N N (proposed) Y $199,500 Y Y >| 3 yrs.


Although the CFTC is no stranger to just in time (de)regulation, it can only extend and/or expand the previously-granted relief; the EU does not have even this option. While Singapore is alone in even recognising the problem, regulators on both sides of the Atlantic have little choice but to continue talking tough while doing nothing. Both the CFTC and ESMA dogmatically assert the LEI imperative, while ushering through non-compliance with an undocumented nod and a wink.

Einstein said it best (though talking of the even more iniquitous prohibition laws), “For nothing is more destructive of respect for the government and the law of the land than passing laws which cannot be enforced.”[3]





[1] The letter specifies 16 applicable jurisdictions. The relief is subject to a response from the relevant countries- Singapore was the only country to reply during the extension period.

[2] Algeria, Argentina, Bahrain, India, Pakistan, People’s Republic of China, Samoa, Singapore, South Korea, Switzerland, Taiwan granted exemption by Letter 13-41. The FSB also refers to Brazil, Russia and Turkey as countries with potentially problematic privacy laws.

[3] Albert Einstein, “My First Impression of the U.S.A.”, 1921

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