On December 8, the Commodity Futures Trading Commission (CFTC) approved a final rule amending Part 37 of the CFTC Regulations addressing operational issues facing swap execution facilities (SEF) and their market participants in connection with the CFTC’s regulatory requirements for a SEF’s audit trail data, financial resources, and chief compliance officer (CCO). Specifically, the Final Rule (1) eliminates the requirement for a SEF to capture and retain post-execution allocation information in its audit trail data, (2) applies the existing Core Principle 13 financial resources requirements to SEF operations in a less burdensome manner, and (3) streamlines requirements for the CCO position and allows SEF management to exercise greater discretion in CCO oversight.
Additionally, the CFTC approved a final rule establishing two exemptions from the requirement to execute certain types of swaps on a SEF or a designated contract market. The first such exemption applies to a swap that meets the requirements of any exception or exemption under part 50 of the CFTC regulations. The second trade execution exemption codifies relief provided under CFTC Letter No. 17-67 and other staff letters, and applies to a swap that is entered into by eligible affiliate counterparties and cleared, regardless of the affiliates’ ability to claim the inter-affiliate clearing exemption under CFTC Regulation Part 50.52.
The CFTC also withdrew more comprehensive proposals to overhaul the SEF regulatory framework.
The press release and access to the final rules are available here.