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
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.