CFTC Proposed Rule: Confirmation, Portfolio Reconciliation, and Portfolio Compression Requirements for Swap Dealers and Major Participants

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Gavel.png FINAL RULE: This page refers to the proposed rule on confirmation, reconciliation and compression requirements. The CFTC Final Rule: Confirmation, Portfolio Reconciliation, Portfolio Compression, and Swap Trading Relationship Documentation Requirements for Swap Dealers and Major Swap Participants was issued August 27, 2012.
Dodd-Frank Timeline, Confirmation, Reconciliation, and Compression, Swap Dealers and Major Swap Participants
Proposal Date Final Rule Issue Effective Date
December 28, 2010 September 11, 2012 November 13, 2012

On December 16, 2010, the CFTC held an open meeting on the Eighth Series of Proposed Rules under the Dodd-Frank Act. Among the topics at this meeting was a rule proposal regarding the confirmation, portfolio reconciliation, and portfolio compression requirements for swap dealers and major swap participants.[1] The proposal as it appeared in the Federal Register can be found below.
Highlights of the proposal:

  • Requirement that participants in a swap transaction generate confirmation on the day of transaction and send within one day.
  • Send a draft of swap terms, other than price, to the counterparty prior to execution.
  • Unless cleared by a DCO, portfolios must be reconciled among participants and discrepancies reported and resolved immediately
  • Any swap on a participant's books that is eligible for compression or offset, and does not increase the participant's risk exposure, should go through compression exercises. Fully offset swap positions should be terminated by the counterparties.

Related Documents: Fact Sheet, Q&A, and Rule Proposal as it Appeared in the Federal Register



References

  1. Open Meeting on Eighth Series of Proposed Rules under the Dodd-Frank Act. CFTC. Retrieved on March 2, 2011.

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