CFTC Reporting and Public Dissemination Proposals for Swaps: CFTC Proposes Rules for the Reporting and Public Dissemination of Swap Transaction and Pricing Data

Sullivan & Cromwell LLP - December 21, 2010
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The Commodity Futures Trading Commission (the “CFTC”) has proposed rules for real-time reporting and public dissemination of swap transaction and pricing data in proposed part 43 (“Part 43”) of its regulations and for non-real-time reporting of swap data, which would not be publicly disseminated, in proposed part 45 (“Part 45”) of its regulations (together, the “Proposed Rules”).

Part 43 would implement the provisions of Section 2(a)(13) of the Commodity Exchange Act (the “CEA”), which was added by Section 727 of Title VII of the Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”). These rules specify, among other things:

  • the scope of swaps to be reported in real time;
  • the parties responsible for reporting and public dissemination;
  • the specific data that must be reported and publicly disseminated in real time;
  • the meaning of “real time”; and
  • the special rules for block trades and large notional swaps.

Part 45 would implement, among other provisions, the requirement in Section 2(a)(13)(G) of the CEA, which was added by Section 727 of Title VII of the Dodd-Frank Act, that each swap (whether cleared or uncleared) shall be reported to a registered swap data repository (“SDR”). These proposed rules specify, among other things, the non-real-time data that must be reported by swap dealers (“SDs”), major swap participants (“MSPs”) and non-SD/MSPs to SDRs, but that will not be publicly disseminated.

The Proposed Rules deviate in a number of ways from the SEC’s proposed rules with respect to reporting security-based swap (“SBS”) transaction, volume and pricing data (the “Proposed SEC Rules” or “Regulation SBSR”), which we have described in a separate memorandum.

In another release issued by the CFTC together with the Proposed Rules, the CFTC proposed part 49 relating to the registration, duties, core principles (including the mitigation of possible conflicts of interest) and certain compliance obligations of SDRs (“Proposed Part 49”). The CFTC has also proposed rules relating to other duties of SDs and MSPs such as the duty to establish and maintain policies and procedures to manage the risks associated with the business of being an SD or MSP. These two proposals are not described below.

The CFTC is requesting comments on what would be an appropriate implementation schedule (i.e., effective date) for its final rules to be adopted from the Proposed Rules. The CFTC also asks, among other questions, whether the implementation time frames for real-time reporting and public dissemination requirements for swaps and SBSs, which will be implemented by the SEC, should be coordinated.