Cftc Rules Rewrite 2021
The modified rules retain the same five parent categories, but make some changes within those categories, as shown below. Watch a roundtable discussion on regulatory reporting and the DRR initiative from the 2021 ISDA North American Conference. Click here. 1 The existing rules of the CFTC can be found under 17 C.F.R. § 43.1 et seq., 17 C.F.R. § 45.1 et seq. and 17 C.F.R. § 49.1 et seq. 86 FR 9224 // PDF Version 02/11/2021 17 CFR Part 37 Swap Execution Facilities Effective Date: Wednesday, May 12, 2021 Before the start of the business analysis of how to comply with and implement the new CFTC rules, the next six months offer a unique opportunity to: A comprehensive and strategic review of the implementation of a cost-effective, sustainable and compliant regulatory trading reporting solution for your business. The time has come. The long-awaited revision of the CFTC`s trade reporting rules was approved on September 17 and published in the Federal Register on November 25.
The Commission has been working on this recast for several years and has considered hundreds of industry comments on the draft amended rules published in 2019. We are now approximately six months away from the implementation of part of the U.S. Commodity Futures Trading Commission`s (CFTC) revised swap data reporting rules, making it the first regulator to amend its reporting framework to incorporate globally harmonized data elements designed to improve the consistency and accuracy of reported data. This is an important and welcome step, but as with any new or changed rule, it brings compliance challenges, including the need for each company to accurately interpret requirements and incorporate relevant changes into their reporting systems. The compliance date of these final regulations is 18 months from the date of publication in the Federal Register. Although the date of publication is unknown in the Federal Register, the compliance date would be April 2022 when the final regulations are published in October 2020. This is the final version of the technical specifications in Parts 43 and 45. I have no doubt that the CFTC intends and very much hopes that this is the final draft. But in my experience, these things often need to be optimized and revised when real-world experience clashes with theoretical rules. The adoption by the CFTC of the swap reporting amendments completed the multi-year efforts by all Commission and CFTC staff within the Market Surveillance Division (OGD) to comprehensively review the Commission`s swap reporting rules since their adoption and implementation in order to improve quality, the accuracy and completeness of the swap data reported to the CFTC. These efforts, officially announced and outlined in OGD`s staff roadmap to obtain high-quality swap data (roadmap), led the CFTC to propose several changes to its swap reporting rules in February 2020.6 In order to increase the complexity of planning, companies that have reporting obligations in the United States are committing. and Canada has also completed a major North American initiative to rearchipe the DTCC.
They`ll likely need to keep their project teams intact to start reviewing the final rules, tackle the business and technical analysis, and perform the same processes they just completed. Washington, D.C. – The Market Participants Division of the Commodity Futures Trading Commission today issued a time-limited no-action letter on capital and financial reporting obligations for swap traders (SD) subject to the capital requirements of a regulatory authority (BANK SD) under the CFTC`s SD Financial Reporting Rules. The rules have been amended to make the 67% nominal amount calculation method the universal standard for determining the minimum block size of the TCRC in the future (after an implementation phase). IsDA is currently prioritising the CFTC`s amended rules given the implementation date in May 2022, but we are also working to digitise the EU`s revised trade reporting requirements under the EUROPEAN Market Infrastructure Regulation (EMIR). While the rules are not completely identical, we expect that a large portion of the COEcs coded for the CFTC requirements will be reused in whole or in part for EMIR. If other jurisdictions amend or develop new trade reporting rules to incorporate globally harmonized data elements, the DRR can be further expanded. If there are still differences in jurisdiction, a single code for each set of rules will reduce the implementation burden on companies, which will have to develop a different logic for each reporting system.
Last month, the CFTC released what it and the industry hope will be the final version of the technical specification for party 43 and 45 reporting as part of the CFTC`s revamped exchange data reporting rules. Unless there is a delay (as is said and discussed), this means that there are only seven months left before the May 2022 compliance date. Consider Thanksgiving and the holiday season and it`s really not long, provided it`s really the final version. The Commission also approved two other measures: a final rule governing compliance by non-US-based derivatives clearing houses and a reproposed rule for COD bankruptcies. The regulation creates a framework that allows certain offsetting organizations not based in the United States to register with the agency while relying heavily on the regulatory systems of their home country. This article discusses several important changes to the final rules for reporting swap data and the registration requirements of the Derivatives Technology Ring (COD) organization that were approved at the public meeting. At ISDA, we are working hard to develop a solution that reduces this burden and supports institutions in their compliance efforts ahead of the TCRC`s May 2022 commissioning date. As part of our Digital Regulatory Reporting (DRR) initiative, we model the modified CFTC rules into human-readable, machine-executable open source code using ISDA`s Common Domain Model (CDM), which companies can use as the basis for their implementation. Basically, it eliminates the inconsistencies that can arise when each company makes its own interpretation of a written set of rules, and avoids having to invest resources from scratch in reviewing, designing, and building reporting logic. While the current rules generally require the CFTC to determine the minimum block size using a calculation of 67% of the nominal amount when collecting data from an SDR of at least one year, the CFTC had not done so before, but had instead used a calculation of 50% of the nominal amount. CFTC reports began in 2013 with operational DTCC, CME and ICE DTRDs.
The CFTC is also carrying out a major overhaul of the reporting rules known as the CFTC ReWrite, and reporting under the new rules is expected to begin in May 2022. For end-user reporting counterparties, the Part 45 amendments also provide some regulatory relief. In particular, for reporting counterparties other than swap/MSP/COD dealers, the amendments to Part 45 remove the requirement to report valuation data on a quarterly basis, as required by the existing Part 45 rules. In addition, the amendments to Part 45 provide end-users who are required to report swap valuation data with a longer period of time to report that data, allowing them two days after the execution date (i.e., 18 The amendments to the TCRC revise Parts 45, 46 and 49 of the record keeping and exchange data reporting requirements and Part 43 of the real-time public reporting requirements to include critical data elements (CDEs) agreed to by the Committee. on payment and market infrastructures and the International Organisation of Securities Commissions, as well as on the modification of certain other data fields specific to the CFTC. This is an extremely important step – as I have consistently pointed out as CfTC Commissioner in developing the original rules, a situation in which each jurisdiction independently sets its own rules and reporting formats leads to incomplete data, inconsistencies and unnecessarily high compliance costs. 21 See CFTC Technical Specification: Parts 43 and 45 Swap Data Reporting and Public Dissemination Requirements, Ver. 2.0 (September 17, 2020), www.cftc.gov/media/4891/DMO_Part43_45TechnicalSpecification09172. In the absence of such explicit guidance from the CFTC, reporting entities will need to discuss and decide how best to align all open swaps with the new standards. Big Bang and update everything on the first day instead of tracking them and updating those that haven`t been updated over time via a natural life cycle event submission.
However, when you consider the complexity that comes with the CFTC rules to move from ICU to ICU, things get complicated pretty quickly. I suspect that SDRs are preparing for very high volumes, with many companies filing a DAY 1 UPDT to do everything easily. 6 See CFTC, “Roadmap to Achieve High Quality Swaps Data” (10 July 2017), www.cftc.gov/sites/default/files/idc/groups/public/@newsroom/doc. The no-action letter was issued in response to a joint request from the Securities Industry and Financial Markets Association and the International Swaps and Derivatives Association on behalf of their SD members, who are also required to comply with the CFTC`s new capital and financial reporting requirements by October 6, 2021. The discharge granted by the letter would expire on October 6, 2023 or the adoption by the CFTC of revised accounting and reporting requirements that apply to these bank DSs. . . .
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