Co-authored by Blake J. Brockway.
On May 1, the Commodity Futures Trading Commission, by a vote of 5-0, issued a proposed interpretative statement that would exempt foreign regulators from certain indemnification and confidentiality provisions of the Commodity Exchange Act (CEA).
Section 21(d) of the CEA provides that, before a swap data repository (SDR) may share data or information with a domestic or foreign regulator, the regulator must enter into a written agreement with the SDR to abide by the confidentiality requirements in the CEA and to indemnify the SDR and CFTC from any litigation expenses that may be incurred for any purported failure of the regulator to comply with the confidentiality agreement.
The CFTC is proposing to interpret section 21(d) to provide that its provisions would not apply to a foreign regulator that has a sufficient independent regulatory interest in obtaining the data even if that data has also been reported to the SDR pursuant to the CEA or CFTC regulations.
The CFTC accordingly proposes to interpret section 21(d) such that a registered SDR would not be subject to the confidentiality and indemnification requirements if: (i) the SDR is also registered, recognized or otherwise authorized in a foreign jurisdiction’s regulatory regime; and (ii) the data sought by a foreign regulatory authority has been reported to the SDR pursuant to the foreign jurisdiction’s regulatory regime.
The proposal will be in the Federal Register for a 30 day comment period.
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