Swap Data Regulation

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Gavel.png FINAL RULE: At its August 24, 2011 open meeting, the CFTC approved the first of its swap data final rules - Registration and Regulation of Swap Data Repositories.
Gavel.png FINAL RULE: At its December 20, 2011 open meeting, the CFTC approved two additional swap data rules: Swap Data Recordkeeping and Reporting Requirements and Real-Time Public Reporting of Swap Transaction Data.
Gavel.png FINAL RULE: Swap Data Recordkeeping and Reporting Requirements: Pre-Enactment and Transition Swaps approved on May 18, 2012.
Gavel.png FINAL RULE: SEC Final Rules: Security-Based Swap Data Repositories approved January 14, 2015. Entered Federal Register March 19, 2015. Effective May 18, 2015.
Dodd-Frank Timeline, Real Time Public Reporting of Swap Transaction and Pricing Data, SEC
Final Rule Issue/New Proposal Proposal Comment Deadline Effective Date, Final Rule
March 19, 2015 May 4, 2015 May 18, 2015
Dodd-Frank Timeline, Swap Data Repository Registration, Duties and Core Principles Regulation, SEC
Reopened Comment Period Deadline Final Rule Issue Effective Date
July 22, 2013 March 19, 2015 May 18, 2015
Dodd-Frank Timeline, Real Time Public Reporting of Swap Transaction and Pricing Data
Final Rule Issue Effective Date Compliance Date
December 20, 2011 March 9, 2012 December 31, 2012
Dodd-Frank Timeline, Registration and Regulation of Swap Data Repositories
Proposal Date Final Rule Issue Effective Date*
December 23, 2010 September 1, 2011 October 31, 2011
Dodd-Frank Timeline, Swap Data Recordkeeping and Reporting Requirements
Final Rule Issue Effective Date No-Action Relief, Part 43/45 No-Action Relief, Part 23
January 13, 2012 March 13, 2012 July 1, 2013 (IRS, CDS); Aug. 19 for other swaps June 30, 2013
Dodd-Frank Timeline, Swap Data Recordkeeping and Reporting Requirements for Pre-Enactment and Transition Swaps
Final Rule Issue Effective Date Compliance Date
June 12, 2012 August 13, 2012 April 10, 2013
Dodd-Frank Timeline, Swap Data Repository Registration, Duties and Core Principles Regulation, SEC
Reopened Comment Period Deadline Final Rule Issue Effective Date
July 22, 2013 March 19, 2015 May 18, 2015
Dodd-Frank Timeline, Real Time Public Reporting of Swap Transaction and Pricing Data, SEC
Final Rule Issue/New Proposal Proposal Comment Deadline Effective Date, Final Rule
March 19, 2015 May 4, 2015 May 18, 2015
Dodd-Frank Timeline, Interim Final Temporary Rule for SBS Data Reporting
Approval Date Comment Deadline Effective Date
October 20, 2010 December 20, 2010 January 12, 2012

Among the mandates of the Dodd-Frank Act are requirements that regulatory agencies such as the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC) create a framework for the transmission, submission, and storage of swap data. As of June 2012, the CFTC had finalized four swap data rulemakings - Registration and Regulation of Swap Data Repositories, Swap Data Recordkeeping and Reporting Requirements and Real-Time Public Reporting of Swap Transaction Data, and Swap Data Recordkeeping and Reporting Requirements: Pre-Enactment and Transition Swaps.

On January 14, 2015, the SEC approved a set of final rules Regulation SBSR. The first rule establishes registration, duties and core principles of security-based swap data repositories and the second, Regulation SBSR, outlines the reporting and dissemination procedures for security-based swap information.

Finalized Swap Data Rules, with Links to Originally-Proposed Rule

CFTC Proposed Rule: Amendments to Swap Data Recordkeeping and Reporting Requirements for Cleared Swaps, August 2015

On August 19, 2015, the Commodity Futures Trading Commission (CFTC) approved a list of proposed amendments to Part 45 of the Commission's regulations, which cover the manner and contents of reporting to swap data repositories (SDRs). The proposed rulemaking is intended to clarify a number of procedures in Part 45, including which counterparty to a swap transaction is responsible for reporting. The rules also aim to improve data quality by reducing the likelihood of double counting of notional exposures.[1]

The proposed rulemaking entered the Federal Register on August 31, 2015 and the deadline for public comment is October 30, 2015. Comments may be filed and viewed on the CFTC web site HERE.

Subsequent to the initial set of rules, which were largely based on the mechanisms for the trading and execution of uncleared swaps, the commission has had an opportunity to consult with market participants and observe how the Part 45 regulations function with respect to cleared swaps. Specifically, the CFTC has observed how Part 45 interacts with Part 39, which contains provisions applicable to derivatives clearing organizations.

The amendments proposed in this rule address these observations and interactions.

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Access to SDR Data by Market Participants, March 2014

On March 26, 2014, the CFTC issued an interim final rule and request for comment on access to market data by parties to a swap. The rule clarifies that, for swaps executed anonymously on a DCM or a SEF, "the data and information maintained by a registered SDR that may be accessed by either counterparty to the swap does not include the identity of the other counterparty to the swap, the identity of the other counterparty’s clearing member for the swap, or such counterparty’s or clearing member’s legal entity identifier."[2] The deadline for public comment is April 25, 2014. Comments may be found HERE.

Reporting of Swap Transaction Data, January 2013

Effective December 31, 2012, swaps on interest rates and credit derivatives traded on a designated contract market (DCM) or traded "off-facility," in which one or more counterparty is a swap dealer, must report transaction and pricing data to an SDR; reporting began on February 28, 2013 for swap dealer transactions in the other three asset classes (equity, foreign exchange, and commodity swaps.

On April 10, 2013, reporting of all remaining off-facility swaps, excluding the real time reporting of off-facility swaps in the other commodity asset class as noted above will begin. Time delays will be phased in over a two-year period as shown in the table below.

Entity/Platform Year One Phase-in Schedule
Swaps on DCM or SEF - all asset classes 30 minutes 15 minutes after October 12, 2013
Mandatory Cleared Swaps not on DCM or SEF, but one party is an SD/MSP 30 minutes 15 minutes after October 12, 2013
Mandatory Cleared Financial Swaps (no SD/MSP) 4 hours 2 hours from Oct. 12, 2013 - Oct. 12, 2014;
1 hour after Oct. 12, 2014
Financial Swaps Exempted from Mandatory Clearing, one party is an SD/MSP 1 hour 30 minutes after October 12, 2013
Other Swaps Exempted from Mandatory Clearing, one party is an SD/MSP 4 hours 2 hours after October 12, 2013
Exempted from Mandatory Clearing, no SD/MSP 48 hours 36 hours from Oct. 12, 2013 - Oct. 12, 2014;
24 hours after Oct. 12, 2014


CFTC Final Rule: Registration and Regulation of Swap Data Repositories, from CFTC Open Meeting, August 4, 2011

At its August 4, 2011 open meeting, the CFTC approved its final rulemaking on the registration and regulation of swap data repositories (SDRs). The provisions include sections on the accuracy of data, real-time reporting rules, SDR governance and compliance, and regulator access to data.

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CFTC Final Rule: Real-Time Public Reporting of Swap Transaction Data, from CFTC Open Meeting, December 20, 2011

At its Decenber 20, 2011 open meeting, the CFTC approved

Under the rules, parties to a swap report the data to a "real-time disseminator" such as a swap data repository, or to a third party such as a designated contract market (DCM) or swap execution facility (SEF). The data shall be made public "as soon as technologically practicable." Block trades and "large notional swaps" transactions, which were part of the originally proposed rules, have been reproposed in a separate rulemaking.

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CFTC Final Rule: Swap Data Recordkeeping and Reporting Requirements, from CFTC Open Meeting, December 20, 2011

At its December 20, 2011 open meeting, the CFTC approved its final rulemaking on swap data recordkeeping and reporting requirements. Provisions include sections on timing of submissions and data storage, who will be the counterparty responsible for reporting under various scenarios, descriptions of the required identifiers, and the prevention of data fragmentation.

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CFTC Final Rule: Swap Data Recordkeeping and Reporting Requirements: Pre-Enactment and Transition Swaps, June 2012

At its October 1, 2010 open meeting, the CFTC issued an interim final rule on pre-enactment transition ("historical") swaps, which are swap transactions entered into prior to the passage of the Dodd-Frank Act and subsequent regulatory rulemakings. The interim rule requires the registration of any unexpired swaps to be reported to a SDR at a date to be set by the commission, and to maintain certain transaction records that may be required once rules have been finalized. These terms were further defined in a subsequent proposal at the CFTC Open Meeting, April 12, 2011.

On June 12, 2012, the Federal Register published the CFTC's final rulemaking on historical swap recordkeeping and reporting. For swaps in existence on or after April 25, 2011, counterparties are required to keep records of specified, minimum primary economic terms for a swap of the asset class in question. Swap dealers and major swap participants (SD/MSPs) must keep the required records in electronic form (unless they were originally created and are exclusively maintained in paper form), while non-SD/MSP counterparties are permitted to keep them in either electronic or paper form. [3]

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SEC Final Rules: Security-Based Swap Data Repositories - January 2015

The final rules entered Federal Register March 19, 2015 and became effective May 18, 2015. The rules are a finalization of two proposals - Regulation SBSR and Federal Register: Security-Based Swap Data Repository Registration, Duties, and Core Principles|SB-SDR Core Principles]]. See below for summaries and links.

Security-Based Swap Data Repository Registration, Duties, and Core Principles

The proposal will require that SDRs:

  • "register with the Commission by filing a new Form SDR, and to update the filing when the information becomes inaccurate. The rules also would provide a process for the Commission to cancel or revoke the registration of an SDR;
  • provide the Commission access to security-based swap data, provide reports to the Commission relating to this data, and provide security-based swap data to relevant authorities upon request;
  • accept all security-based swaps reported to them (in asset classes that the SDR accepts);
  • accept transaction data and maintain it for not less than five years after the expiration of the applicable swap, and to calculate positions and maintain them for not less than five years; [and]
  • adopt policies and procedures reasonably designed to: 1) resolve disputes over the accuracy of security-based swap data; 2) ensure that their automated systems provide adequate levels of capacity, resiliency, and security; and 3) protect the privacy of security-based swap transaction information, material non-public information, and intellectual property."

The rules would also:

  • "require SDRs to make certain disclosures to a market participant prior to accepting any security-based swap data from that market participant; [and]
  • require an SDR's board of directors or a body performing a similar function to designate a chief compliance officer, who would be responsible for, among other things, preparing an annual compliance report, which must be filed with the Commission along with an annual audited financial report."
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Regulation SBSR—Reporting and Dissemination of Security-Based Swap Information

The proposed rules:

  • "Parties to a security-based swap transaction would be required to report information about each transaction to a registered security-based swap data repository.
  • The registered security-based swap repository would be required to publicly disseminate certain of that information in a timely fashion."
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Swap Data Final Rule from the October 13, 2010 SEC Meeting

Reporting of Security-Based Swap Transaction Data

The final rule will require that parties to SBS transactions:

  • "report certain information relating to pre-enactment security-based swaps to a registered security-based swap data repository after such registered security-based swap data repository is operational, or to the Commission;
  • report information relating to pre-enactment security-based swaps to the Commission upon request;" and
  • retain SBS information.
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References

  1. CFTC Issues Proposed Amendments to Swap Data Recordkeeping and Reporting Requirements for Cleared Swaps. CFTC. Retrieved on September 8, 2015.
  2. Swap Data Repositories—Access to SDR Data by Market Participants. CFTC. Retrieved on April 2, 2014.
  3. CFTC Approves Final Rule on Swap Data Recordkeeping and Reporting Requirements for Pre-Dodd-Frank and Transition Swaps. CFTC. Retrieved on May 21, 2012.