CFTC Staff Letter 15-25: Extension of No-Action Relief for SEF Confirmation and Recordkeeping Requirements

U.S. COMMODITY FUTURES TRADING COMMISSION
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CFTC Letter 15-25
No-Action
April 22, 2015
Division of Market Oversight
Re: Extension of No-Action Relief for SEF Confirmation and Recordkeeping Requirements under Commission Regulations 37.6(b), 37.1000, 37.1001, and 45.2, and Additional Relief for Confirmation Data Reporting Requirements under Commission Regulation 45.3(a) Ladies and Gentlemen:
On August 14, 2014, the Division of Market Oversight (“Division”) issued CFTC No￾Action Letter 14-108 to provide relief for swap execution facilities (“SEFs”) from confirmation and recordkeeping requirements set forth in Commission Regulations 37.6(b), 37.1000, 37.1001, and 45.2. The no-action letter provided that the Division would not recommend enforcement action against a SEF that, without first obtaining copies of the underlying previously-negotiated agreements between the counterparties to a non-cleared transaction, incorporates such agreements by reference in the trade confirmation required under Commission Regulation 37.6(b). The letter also provided that the Division would not recommend enforcement action if a SEF failed to maintain a copy of the incorporated underlying agreements as required under Commission Regulations 37.1000, 37.1001, and 45.2(a). Relief Requested Absent further action from the Division, No-Action Letter 14-108 will expire on September 30, 2015. In its letter dated April 15, 2015, 1 the Wholesale Markets Brokers’ Association, Americas (“WMBAA”) 2 has requested that the relief granted in No-Action Letter 14-108 be extended until March 31, 2016 with the addition of relief from certain swap data reporting requirements under Commission Regulation 45.3(a)(1). According to WMBAA, the relief granted in No-Action Letter 14-108 has not eased the operational concerns that prompted the original request for relief. Due to the complexity of the issue, WMBAA states that SEFs have been unable to develop a method to request, accept and maintain a library of every underlying previously-negotiated freestanding agreement between counterparties that is not cumbersome and cost prohibitive. According to WMBAA, many of these agreements are maintained in paper form, or scanned PDF files, making them impossible to quickly digitize in a