United States: Breaking- CFTC Staff Offers Relief From Reporting And SEF Rulebook Enforcement Obligations In A Series Of Letters

Last night the CFTC Division of Market Oversight ("DMO") released CFTC Letters 13-55, 13-56, and 13-57. CFTC Letters 13-56 and 13-57 are particularly relevant for market participants other than SEFs.

CFTC Letter 13-55 provides no-action relief to the SEFs for compliance with the Part 43 reporting obligations and the obligation to report creation data in Part 45, each for swaps in FX, other commodity and equity asset classes. The relief is conditioned on either the reporting counterparty reporting the data, or the SEF back-loading the data when it is able. In addition, the SEFs must submit a notice to the DMO and comply with all recordkeeping requirements. The relief expires on October 30, 2013 for FX swaps and on December 2, 2013 for other commodity and equity swaps.

CFTC Letter 13-55 is available here.

CFTC Letter 13-56 provides no-action relief to a reporting counterparty for failing to report required swap continuation data under Part 45 or for errors and omissions in swap continuation data for equity, FX and other commodity asset classes that are executed on, or pursuant to, the rules of a SEF. A reporting counterparty's ability to report continuation data may depend on the SEF's fulfillment of its obligations under section 45.3(a) to report swap creation data. As described above, those obligations have been delayed under CFTC Letter 13-55. The reporting counterparty must inform the SEF of circumstances causing a failure to report and must retain records of the transactions. CFTC Letter 13-56 expires on October 29, 2013 with respect to FX swaps and December 1, 2013 with respect to other commodity and equity swaps.

CFTC Letter 13-56 is available here.

CFTC Letter 13-57 provides no-action relief to the enforcement of certain rules against SEFs, with respect to market participants trading on those SEFs until November 1, 2013. The relief covers: 37.200(a), 37.200(b), 37.201(b)(1), 37.201(b)(3), 37.201(b)(5), 37.202(b) and 37.203. The rules covered by CFTC Letter 13-57 would require SEFs to enforce their own rulebooks and compel participants to consent to the jurisdiction of the SEF. As a practical result, this means that market participants would have to agree to each SEFs rulebook, many of which have just been released or have not yet been released.

The relief will be welcome news to buy-side participants, who were being forced into agreeing to terms and rulebooks with very little time to review and negotiate. SEFs must still create rulebooks, but they will not have to enforce them against market participants.

CFTC Letter 13-57 is available here.

Good day. Good delay. TSR

This article is presented for informational purposes only and is not intended to constitute legal advice.