CFTC Staff Letter 12-04: Temporary No-Action Relief for Non-Clearing Member Swap Dealers from Large Swaps Trader Reporting Requirements

U.S. COMMODITY FUTURES TRADING COMMISSION
Three Lafayette Centre
1155 21st Street, NW, Washington, DC 20581
Telephone: (202) 418-5260
Facsimile: (202) 418-5527 www.cftc.gov
Division of
Market Oversight
CFTC Letter No. 12-04
No-Action
July 17, 2012
Division of Market Oversight
Staff No-Action Relief: Temporary Relief for Non-Clearing Member Swap Dealers from the Requirements of § 20.4 of the Commission’s Regulations Regarding Large Swaps Trader Reporting for Physical Commodities On July 22, 2011, the Commission published large trader reporting rules for physical commodity swaps and swaptions (for ease of reference, “swaps”). 76 FR 43851. The rules are codified in Part 20 of the Commission’s regulations and became effective on September 20,
2011. Section 20.3 of the reporting rules requires daily reports from clearing organizations.
Section 20.4 of the reporting rules requires daily reports from clearing members and swap
dealers (“reporting entities”). Section 20.7 provides that unless otherwise instructed by the Commission, a clearing organization or reporting entity shall submit data records and any other information required by the reporting rules using the format, coding structure, and electronic data transmission procedures approved in writing by the Commission. Section 20.8(a)(4) delegates to the Director of the Division of Market Oversight (“DMO” or “Division”) the authority for determining the format, coding structure, and electronic data transmission procedures for Part 20 reports. As of July 2, 2012, clearing organizations and clearing members are required to be in full compliance with Part 20.1 Swap dealers that are not clearing members (“non-clearing member swap dealers”) are required by Section 20.10(b) to comply with Part 20 upon the effective date of final regulations further defining the term swap dealer. The Commission has adopted these final regulations, and their effective date is July 23, 2012. 77 FR 30596. Market participants have raised concerns that Part 20 thus imposes reporting requirements on swap dealers before 1 On September 16, 2011, the Division issued a letter under Section 20.10(c) to relieve clearing organizations and clearing members as a class from the reporting requirements of Sections 20.3 and 20.4 until November 21, 2011 for cleared swaps, and January 20, 2012 for uncleared swaps. On November 18, 2011, the Division issued a second letter under Section 20.10(c) to establish a conditional safe harbor for less than fully compliant reporting under Sections 20.3 and 20.4 until March 20, 2012. On March 20, 2012, the Division issued conditional no-action relief for less than fully compliant reporting under Sections 20.3 and 20.4 until July 2, 2012. Both the safe harbor and no￾action relief were conditioned on the submission of month-end open interest reports to the Commission, as well as the submission of an e-mail describing how the submitted reports vary from fully compliant reports, arrangements being made to reach full compliance, and the anticipated date of full compliance. On July 2, 2012, the Division issued no-action relief for less than fully compliant reporting under Section 20.4 for reports on positions based on ownership until July 27, 2012.