August 19, 2014

CFTC Staff Issues Time-Limited, Conditional No-Action Relief Regarding Documentation of Confirmations of Uncleared Swap Transactions

Washington, DC — The U.S. Commodity Futures Trading Commission’s (Commission) Division of Market Oversight (DMO) recently issued a no-action letter providing swap execution facilities (SEFs) time-limited, conditional relief from certain data reporting and recordkeeping requirements in relation to confirmations required for uncleared swap transactions executed on or pursuant to the rules of a SEF under Commission regulation 37.6(b). The no-action relief provided will expire at midnight (EDT) on September 30, 2015.

Commission regulation 37.6(b) requires a SEF to provide each counterparty to a transaction entered into on or pursuant to the rules of the SEF with a written record of all terms of the transaction, which supersedes any previous agreement and serves as the confirmation of the transaction. The DMO no-action letter provides that, for uncleared swap transactions executed on or pursuant to the rules of a SEF, DMO will not recommend that the Commission take enforcement action against a SEF in two instances.

DMO will not recommend enforcement action if a SEF incorporates the terms of underlying previously-negotiated agreements in the confirmation without copies of the underlying agreements first being submitted to the SEF, as indicated in footnote 195 to part 37 of the Commission’s regulations. DMO will also not recommend enforcement action if a SEF fails to obtain by the time of execution copies of the incorporated underlying agreements as required under the recordkeeping provisions of parts 37 and 45 of the Commission’s regulations. This no-action relief is conditioned on copies of all incorporated underlying previously-negotiated agreements being available to Commission staff on request, within a reasonable period of time.

Last Updated: August 19, 2014