Swap Recordkeeping Requirements: CFTC Issues Proposed Rules to Impose Swap Recordkeeping Requirements on All Swap Market Participants

Sullivan & Cromwell LLP - January 19, 2011

Title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”) creates new and expanded recordkeeping and reporting requirements for all market participants that enter into swap transactions. The Commodity Futures Trading Commission (the “CFTC”) has recently issued interim final rules to implement some of these recordkeeping and reporting requirements, which require immediate action by any market participant that has entered into any unexpired swap transaction before and/or after the enactment of Dodd-Frank on July 21, 2010. Notably, these recordkeeping requirements under the interim final rules apply to any counterparty that has entered into a swap transaction, whether or not such entity is currently regulated by the CFTC or would be regulated by the CFTC in the future under other provisions of Dodd-Frank. While the obligations imposed by the interim final rules are currently in effect for all market participants, the CFTC has solicited comments from market participants on the recordkeeping and reporting obligations imposed by the interim final rules, in advance of any permanent recordkeeping and reporting obligations for swap market participants.

In addition, another proposed rule, if adopted, will require swap dealers and major swap participants (“MSPs”) to record the execution of swap transactions to the nearest minute and to record all telephone conversations that lead to the execution of a swap transaction.

This memorandum will only address the recordkeeping requirements, and not the reporting requirements, included in these rulemakings.