Co-authored by Christian B. Hennion and Blake J. Brockway.
On May 18, the Commodity Futures Trading Commission approved a final rule on swap data recordkeeping and reporting requirements for pre-enactment swaps and transition swaps. The rule expands the swap data recordkeeping and reporting requirements to include swaps entered into before the enactment of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the Dodd-Frank Act) (pre-enactment swaps) and swaps entered into after the Dodd-Frank Act but before the compliance date of the CFTC’s previously adopted swap recordkeeping and reporting rule (transition swaps).
Under the rule, each counterparty to a pre-enactment or transition swap that was in existence on or after April 25, 2011 must retain records of all of the primary economic terms of each swap. In addition, each counterparty must retain possession of any of the following information that it has: (1) any confirmation of the swap executed by the counterparties; (2) any master agreement governing the swap, and any modification or amendment; and (3) any credit support agreement or other agreement between the counterparties that has the same function as a credit support agreement. Each counterparty is also required to retain any required record related to a pre-enactment or transition swap that is created after the compliance date.
Swap dealers (SDs) and major swap participants (MSPs) must retain records in electronic form unless the record was originally created and exclusively maintained paper form. Non-SD/MSP counterparties may retain records in either electronic or paper form. All such records required must be kept for a period of at least five years following the termination of the swap.
The reporting requirements vary based on the creation date. The reporting counterparty to each pre-enactment swap or transition swap in existence on or after April 25, 2011 must report the following information by the compliance date: (1) the primary economic terms of the swap; (2) the legal entity identifier; (3) the initial counterparty identifier or legal entity identifier used by the reporting counterparty to identify the non-reporting counterparty; and (4) the internal transaction identifier used by the reporting counterparty to identify the swap. In addition, the reporting counterparty must report certain swap continuation data for all uncleared pre-enactment, and transition swaps. On the compliance date, the reporting counterparty for each pre-enactment or transition swap that expired or was terminated prior to April 25, 2011, must report any information that was in the parties possession on or after October 14, 2010 for pre-enactment swaps or December 17, 2010 for transition swaps. The reporting counterparty is determined in the manner described in the CFTC’s previously adopted swap data reporting rules.
The rule will become effective 60 days after publication in the Federal Register. The compliance date for SDs and MSPs with respect to credit swaps and interest rate swaps is 60 calendar days after publication of the CFTC’s rule defining “swap”. The compliance date for SDs and MSPs with respect to equity swaps, foreign exchange swaps, and other commodity swaps is 90 days after the compliance date for credit swaps and interest rate swaps. The compliance date for non-SD/MSP counterparties is 90 days after the equity swaps, foreign exchange swaps, and interest rate swaps compliance for SDs and MSPs.
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