Under Commodity Futures Trading Commission ("CFTC") rules, nonregistered U.S. entities engaging in swaps activities faced a deadline of April 10, 2013 to report information with respect to all of their swaps to a "swap data repository" ("SDR"), either by themselves reporting such information or by having their counterparties satisfy the reporting requirements. While much of the reporting burden falls on "swap dealers" and "major swap participants," which are required to report all swaps to which they are parties and for which the reporting requirements are already effective, many entities that engage in swaps also have swaps with parties that are not swap dealers or major swap participants (for example, interaffiliate swaps or swaps with foreign counterparties). These swaps must be reported by the U.S. entities that are parties to the swaps (typically corporate end users, which might not have a robust system in place capable of handling this type of reporting).
On April 9, the CFTC released a no-action letter (No. 13-10) postponing the April 10 compliance date for parties that are not swap dealers or major swap participants, to provide these parties with additional time to develop their systems and/or assess the availability of more permanent relief from reporting requirements.
For parties that are not swap dealers or major swap participants and that are not "financial entities," 1 the no-action letter provides three different extensions:
1. Reporting for new interest rate swaps and credit swaps will not be required until July 1, 2013. However, a party using this extension must report all swaps executed during the interim period (April 10, 2013 to July 1, 2013) no later than August 1, 2013.
2. Reporting for new equity swaps, foreign exchange swaps, and other commodity swaps will not be required until August 19, 2013. However, a party using this extension must report all swaps executed during the interim period (April 10, 2013 to August 19, 2013) no later than September 19, 2013.
3. Reporting for "historical swaps" (swaps that were in force at any point between July 21, 2010 and April 10, 2013, including swaps that have since been terminated) will not be required until October 31, 2013.
For parties that are not swap dealers or major swap participants but are financial entities, no extension was provided for the reporting of new interest rate swaps and credit swaps. However, the no-action letter does provide extensions for certain other types of swaps and for historical swaps:
1. Reporting for new equity swaps, foreign exchange swaps, and other commodity swaps will not be required until May 29, 2013. However, a party using this extension must report all swaps executed during the interim period (April 10, 2013 to May 29, 2013) no later than June 29, 2013.
2. Reporting for "historical swaps" will not be required until September 30, 2013.
While these extensions are a welcome relief for many swap counterparties, entities benefiting from this no-action relief should by no means be complacent. The revised deadlines will arrive all too soon, and systems need to be put in place to comply with the reporting requirements (or alternatively, the potential availability of more permanent exemptions from reporting will need to be explored). Companies that are just beginning to evaluate what swaps reporting they may need to undertake should contact their legal counsel to assess the reporting requirements, and companies that have already been working to develop and implement reporting systems should contact their legal counsel to assess how their compliance efforts may be affected by recent regulatory developments (including other CFTC no-action letters). We also note that swap recordkeeping requirements set forth in parts 45 and 46 of the CFTC regulations are still effective as of April 10 for nonregistered entities, as the CFTC has not postponed the deadline for compliance with those requirements.
CFTC Letter No. 13-10 may be accessed here.
1. Section 2(h)(7)(C) of the Commodity Exchange Act defines a "financial entity" as:
i. a swap dealer;
ii. a security-based swap dealer;
iii. a major swap participant;
iv. a major security-based swap participant;
v. a commodity pool;
vi. a private fund as defined in section 80b–2 (a) of title 15;
vii. an employee benefit plan as defined in paragraphs (3) and (32) of section 1002 of title 29; or
viii. a person predominantly engaged in activities that are in the business of banking, or in activities that are financial in nature, as defined in section 1843 (k) of title 12.
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