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CFTC Revamps Its Swap Data Reporting Regulations

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The Commodity Futures Trading Commission (CFTC) is proposing amendments to its Part 45 swap data reporting regulations related to cleared swaps. The amendments primarily affect swap data repositories (SDRs), derivatives clearing organizations (DCOs), designated contract markets (DCMs), swap execution facilities (SEFs), swap dealers (SDs), and major swap participants (MSPs). But, they also could impact swap counterparties who are neither SDs nor MSPs particularly if they submit swaps for clearing that were executed originally off a facility and are designated as the reporting counterparty.

The CFTC explains that upon acceptance of a swap by a DCO for clearing, the original swap is extinguished and replaced by equal and opposite swaps, with the DCO as the counterparty to each such swap. The original swap that is extinguished upon acceptance for clearing is referred to as the “alpha” swap and the equal and opposite swaps that replace the original swap are referred to as “beta” and “gamma” swaps. The proposed amendments differentiate reporting requirements for cleared and uncleared swap transactions and explicitly address swap counterparty and registered entity reporting requirements for each specific component (e.g., alpha, beta, and gamma) of a cleared swap transaction. If an original “alpha” swap is executed between two end-users which are not SDs/MSPs, off a facility, and the swap will be submitted to a DCO for clearing, then one of those end-users still must be the reporting counterparty who reports the Primary Economic Terms (PET) of the original “alpha” swap to an SDR even if the swap is accepted by the DCO for clearing.

Notably, the CFTC also is updating its Part 45 regulations to remove language regarding the phase in of compliance and to show the quicker time deadlines that are now in effect for swap data reporting.

Comments on the CFTC’s proposal are due October 30, 2015.

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