The U.S. Commodity Futures Trading Commission (CFTC) has issued a common date by which swap dealers must register. The announcement comes after mounting criticism from industry members that the CFTC is causing confusion with its graduated deadlines.
As it stands, an entity must register as a swaps dealer within two months of exceeding a notional threshold of $8 billion. This does not prohibit an entity from applying for registration prior to crossing the threshold.
The CFTC’s rationale behind establishing a common date included the idea that it would be cost-prohibitive to have a graduated date. The information supplied by one reporting firm could cause compliance issues for non-reporting firms or firms that have yet to report.
“The public dissemination of data reported by one, or even a few, early registrants may facilitate the identification of parties to the swaps for which data has been reported,” the CFTC said in its no-action letter.
CFTC Issues No-Action Letter
Yesterday, the CFTC issued a no-action letter that applies a common date for all market participants who have crossed the $8 billion threshold.
“The no-action relief provided herein is time-limited, and ends in all respects at 12:01 a.m. eastern time on April 10, 2013 – which is the date by which any swap counterparty that is not a swap dealer or a major swap participant is required to be in full compliance with the swap data reporting rules,” the CFTC stated in the no-action letter.
Meanwhile, reporting requirements for equity swaps, foreign exchange swaps, and other commodity swaps are not yet in effect, nor are they affected by the no-action letter. The reporting requirement for these swaps will go into effect on Jan. 1, 2013.
This comes on the heels of news that the Treasury will exempt FX swaps from clearing requirements that affect other swaps and OTC derivatives. The clearing exemption, though, does not erase the reporting requirement. Entities that deal in FX swaps must report to the CFTC by January 1, 2013, unless a no-action order is issued by the CFTC.
Read the CFTC no-action letter here.
