The U.S. Commodity Futures Trading Commission (Commission) today voted to propose amendments to existing 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 comment period ends 60 days after the publication in the Federal Register.
The proposed amendments (Proposed Rules) would modify Part 45 of the Commission’s regulations, which the Commission 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 Commission’s ongoing efforts to improve swap data quality, Commission staff has continued to evaluate the operation of Part 45, including reporting issues involving cleared swaps.
Among other goals, the Proposed Rules are intended to remove 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 Commission anticipates the Proposed Rules 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 Proposed Rules would:
- Clarify DCO creation data reporting obligations for swaps created pursuant to the rules of a DCO that have a DCO as a counterparty;
- Clarify which entity has the obligation to choose the SDR to which creation data is reported;
- Eliminate confirmation data reporting obligations for swaps that are intended to be submitted to a DCO for clearing at the time of execution;
- Clarify 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;
- Clarify DCO obligations to report data providing for the linking of swaps involved in a cleared swap transaction;
- Codify 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;
- Clarify 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;
- Clarify 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;
- Clarify 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;
- Modify and supplement primary economic terms data fields in Appendix 1 to part 45 to account for clarifications described above.