CFTC Approves Final Rule to Amend Swap Data Recordkeeping and Reporting Requirements for Cleared Swaps

CFTC.com – Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) today approved a final rule (the Final Rule) that amends existing swaps reporting regulations in order to provide additional clarity to swap counterparties and registered entities regarding their reporting obligations for cleared swap transactions; and to improve the efficiency of data collection and maintenance associated with the reporting of the swaps involved in a cleared swap transaction.

The Final Rule adopts as proposed changes to Part 45 proposed in the Federal Register on August 31, 2015 (80 F.R. 52544). The Final Rule will become effective 180 days following publication in the Federal Register.

The Final Rule modifies Part 45 of the CFTC’s regulations, which the CFTC adopted on December 20, 2011. Part 45 implements the requirements of Section 21 of the Commodity Exchange Act by establishing the manner and contents of reporting to swap data repositories (SDRs). As part of the CFTC’s ongoing efforts to improve swap data quality, CFTC staff has continued to evaluate the operation of Part 45, including reporting issues involving cleared swaps.

The Final Rule removes uncertainty as to which counterparty to a swap is responsible for reporting creation and continuation data for each of the various components of a cleared swap transaction, including to further clarify whose obligation it is to report the extinguishment of a swap upon its acceptance by a derivatives clearing organization (DCO) for clearing. The CFTC anticipates that the Final Rule will have a number of other benefits, including a reduced likelihood of double counting notional exposures and an improved ability to trace the history of a cleared swap transaction from execution between the original counterparties to clearing novation.

Specifically, the Final Rule:

• Clarifies DCO creation data reporting obligations for swaps created pursuant to the rules of a DCO that have a DCO as a counterparty;
• Clarifies which entity has the obligation to choose the SDR to which creation data is reported;
• Eliminates confirmation data reporting obligations for swaps that are intended to be submitted to a DCO for clearing at the time of execution;
• Clarifies DCO continuation data reporting obligations for swaps that are accepted for clearing, including the obligation to report terminations to the SDR to which the swap was originally reported;
• Clarifies DCO obligations to report data providing for the linking of swaps involved in a cleared swap transaction;
• Codifies no-action letters by proposing the elimination of the requirement for swap dealer/major swap participant reporting counterparties to report daily valuation data for cleared swaps (which is effective immediately upon publication in the Federal Register);
• Clarifies DCO obligations to create, transmit, and use unique swap identifiers for swaps created pursuant to the rules of a DCO that have a DCO as a counterparty;
• Clarifies that the DCO will be the reporting counterparty for swaps created pursuant to the rules of a DCO that have a DCO as a counterparty;
• Clarifies that all swap data for a given swap created pursuant to the rules of a DCO that has a DCO as a counterparty, and that all swap data for each such swap that replaces a particular swap that is accepted for clearing, must be reported to a single SDR;
• Modifies and adds data elements to be reported as primary economic terms data fields in Appendix 1 to Part 45 to account for clarifications described above