On April 9, 2013, the CFTC staff issued a letter (the “Reporting No-Action Letter”)1 providing temporary relief from certain swap reporting requirements for parties that are not required to register with the CFTC as swap dealers or major swap participants. The Commodity Exchange Act, as amended by the Dodd-Frank Act, establishes a broad regulatory structure for swaps that includes significant reporting requirements (the “Reporting Requirements”) both for new swaps and for swaps entered into either (i) before Dodd-Frank was enacted or (ii) following the law’s enactment but prior to the effective date for the reporting requirements applicable to new swaps (collectively (i) and (ii), “Historical Swaps”). The Reporting Requirements, and certain related recordkeeping requirements, are found in three Parts of the CFTC’s regulations:
For a party that is not a swap dealer or major swap participant (a “Non-SD/MSP”), the Reporting Requirements were scheduled to become effective on April 10, 2013. After significant discussions with industry representatives, the CFTC staff issued the Reporting No-Action Letter to grant time-limited relief from the April 10 deadline.
For Non-SD/MSPs that are financial entities2 — such as commodity pools and other investment funds — the Reporting Requirements became effective on April 10, 2013 with respect to new swaps that are interest rate swaps or credit swaps. However, the Reporting No-Action Letter does defer the Reporting Requirements for certain swaps as follows:
The relief provided with regard to Part 43 and Part 45 reporting is conditioned upon the financial entity backloading and reporting to a registered swap data repository (“SDR”) by June 29, 2013 the swap transaction data required to be reported by Part 45 for swaps entered into from April 10, 2013 through May 29, 2013.
For Non-SD/MSPs that are not financial entities, the CFTC staff has provided more extensive interim relief. For non-financial entities, the Reporting No-Action Letter defers the Reporting Requirements as follows:
The CFTC staff’s relief with regard to interest rate and credit swaps is conditioned upon a non-financial entity backloading and reporting to an SDR by August 1, 2013 certain required data for swaps entered into from April 10, 2013 through July 1, 2013. With regard to equity swaps, foreign exchange swaps, and other commodity swaps, the CFTC staff’s relief is conditioned upon a non-financial entity backloading and reporting to an SDR by September 19, 2013 certain required data for swaps entered into from April 10, 2013 through August 19, 2013. The data that must be backloaded consists of information required to be reported under Part 45 of the CFTC’s regulations.
The Reporting No-Action Letter applies solely to Non-SD/MSPs and does not affect their recordkeeping obligations. Nor did the Letter relieve firms from the requirement to obtain a CFTC Interim Compliant Identifier by April 10, 2013 (i.e., the unique identifier to be used for recordkeeping and reporting under the CFTC's rules).
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This article was originally published by Bingham McCutchen LLP.