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CFTC Extends Swap Reporting Enforcement for Businesses

  • By Konstantine Kastens, Government Relations Administrator, AFP
  • Published: 2013-04-10

The U.S. Commodity Futures Trading Commission (CFTC) on Wednesday issued an enforcement delay on reporting requirements for end-user counterparties to swap transactions. Required by the Dodd-Frank Act, the scheduled reporting compliance date of April 10 had been established for counterparties that were neither "swap dealers" nor "major swap participants." However, citing concerns over needed time to resolve data complications and compliance clarity, the CFTC moved to push forward enforcement of rules that would have otherwise been put into effect today.

As part of new supervisions enacted through the Dodd-Frank Act aimed at bringing transparency to the $600+ trillion derivatives market, regulators set up rules requiring that transaction information be reported to swap data repositories (SDR).

Per a released no-action letter by the CFTC, reporting compliance relief applies to end-users that are not "financial entities," extending the compliance date for interest-rate and credit swap to July 1; equity, foreign exchange and commodity swaps to August 19; and for non-financial counterparties, an extension until October 21 for all swap asset classes.

While the derivatives industry is exposed to risky speculative practices, the rulemaking process has continually encountered the need to reconcile adequate oversight of those practices, largely attributed to large financial institutions, with prudential hedging practices of businesses, which utilize derivatives for risk management, operations funding and price protection.

 

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