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The Resource for the Global Finance Profession

CFTC to Delay Swap Reporting Rules for Corporate End-Users?

  • By Konstantine Kastens
  • Published: 2013-04-03

With the April 10 compliance deadline approaching for corporate end-user reporting requirements under the Dodd-Frank Act, the Commodity Futures Trading Commission (CFTC) should suspend enforcement until after October 31, 2013, Commissioner Bart Chilton said Wednesday.  

As part of a statement he calls “The End-User Bill of Rights,” Chilton says he will not, upon prompt deadline, support enforcement action against end-users, arguing that a six-month compliance postponement would ensure that Dodd-Frank implementation “not be done so harshly.”

In accordance with Dodd-Frank, final rules were issued by the CFTC in December 2012 to require all swap transactions, past and present, be reported to newly-established swap data repositories (SDR). Although reporting compliance is chiefly within the domain of swap dealers or major swap participants, end-users will be obligated to report over-the-counter swap transactions with other end-users. Swap transactions exclusively between end-user counterparties are particularly common on energy markets. Beyond that, the CFTC’s final rules specify reporting requirements for registered entities that engage in transactions with end-users.

Chilton’s comments go on to highlight the distinctions separting corporate end-users from other major swap participants and swap dealers, whom he identifies for their role in the 2008 financial collapse, and thus necessitating the scrupulous oversight prescribed to them by Dodd-Frank. The $600 trillion derivatives market stands at the center of sweeping reforms to bring greater transparency to financial markets and prevent the sort of speculative behavior that brought down large financial institutions and led to massive government assistance in 2008.

In mapping out these reforms, Dodd-Frank differentiates non-financial swap end-users, who seek derivatives for financial hedging and price protection, from the broader scope of the risk-induced financial speculation.

AFP has stood with those lawmakers and regulators throughout the rulemaking process who acknowledge the intended protections for end-users. As U.S. Congress considers legislation that further clarifies end-user exemptions for margin requirements, AFP will continue to urge lawmakers for their support. Meanwhile, AFP applauds Commissioner Chilton’s efforts to protect a crucial risk-management resource for businesses from haphazard rulemaking.

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