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CFTC staff provides relief in connection with swap trade confirmations

First Published 15th March 2016

The U.S. Commodity Futures Trading Commission's Division of Market Oversight has issued a no-action letter extending the time period for relief in connection with swap trade confirmation requirements, previously provided in CFTC Staff Letter 15-25, which expires on March 31, 2016.

Washington, DC - The no-action letter extends relief to the earlier of (1) 11:59 pm (Eastern Time) March 31, 2017 or (2) the effective date of revised CFTC regulations that establish a permanent solution to the confirmation matters raised by the current regulations. The relief is subject to terms and conditions in the letter.

According to the letter, relief is provided to swap execution facilities (SEFs) from the requirement in CFTC Regulation 37.6 that a SEF obtain documents that are incorporated by reference in a trade confirmation issued by a SEF, prior to issuing the confirmation. SEFs are also relieved from the requirement in CFTC Regulations 37.1000, 37.1001 and 45.2(a) that a SEF maintain such documents as records. Finally, the letter states that SEFs are relieved from the requirement in CFTC Regulation 45.3(a) that a SEF report confirmation data contained in the documents that the SEF incorporates by reference in a confirmation.

In addition, as noted in the letter, DMO will not recommend that the CFTC take enforcement action if:

(1) In a confirmation provided pursuant to CFTC Regulation 37.6(b), a SEF incorporates by reference terms from previously-negotiated agreements between the counterparties, without first having obtained copies of such agreements;

(2) A SEF fails to maintain a copy of the agreements incorporated by reference in the SEF's confirmation, as required under CFTC Regulations 37.1000, 37.1001 and 45.2(a); or

(3) A SEF does not report confirmation data contained in the documents that a SEF incorporates by reference in a confirmation, as required under CFTC Regulation 45.3(a).

The letter, however, notifies the SEF that it must continue to report all swap data that the SEF is reporting as of the time of the issuance of the letter, as required by part 45 of the CFTC's regulations, even if such data are contained in the documents that the SEF incorporates by reference in a confirmation.

(CFTC Staff Letter 16-25) and CFTC Staff Letter 15-25