The Commodity Futures Trading Commission (CFTC) has established a new April deadline for swap dealers to comply with certain reporting requirements under the Dodd-Frank Wall Street Reform Act.
In a recent no-action letter, the CFTC’s Division of Market Oversight (DMO) and Division of Swap Dealer and Intermediary Oversight (DSIO) said “limited relief for swap dealers from the compliance timeline contemplated by the swap data reporting rules is warranted.” They recommended that the agency not take enforcement action against a swap dealer for failing to report swap transactions before the new deadline — no later than April 10.
Existing CFTC regulations require entities that engage in more than $8 billion in swaps annually to register with the agency by Dec. 31, but an “entity could elect to apply for registration, and thereby become a swap dealer at an earlier date,” the letter said (see Daily GPI, Oct. 15; April 19). The dollar threshold is substantially lower for swap transactions involving “special entities,” such as publicly-owned, government-owned or federal agency utilities.
“Concerns have been expressed, by market participants and other interested parties, regarding the potential for differing compliance dates for swap dealer reporting under the swap data reporting rules, in the event that one or more entities apply to register as swap dealers before their swap dealer registration deadline,” the letter said. “With respect to those entities whose swap dealing activities exceeded one of the [two] notional thresholds in the month of October, and that will therefore be among the initial group of swap dealers required to comply with the swap data reporting rules, it has been noted that the first such entity to apply to register as a swap dealer will also be the first — and potentially, for some period of time, the only — entity to have its swap transaction and pricing data publicly disseminated.”
This “may facilitate the identification of parties to the swaps for which data has been reported, raising concerns under Commission [regulations],” it noted.
In recommending the change in the compliance deadline, the DSIO and DMO also said they “have been advised that, in at least some instances, market participants have designed their swap data reporting infrastructure on the understanding that all swap dealers would be required to begin reporting on the same day. DSIO and DMO have been [told by entities] that, in order to accommodate differing compliance dates, costly last-minute modifications to such infrastructure would be required in order to avoid reporting errors.”
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