swap dealers

CFTC Approves Proposed Amendments to Margin Requirements for Swap Dealers and Major Swap Participants

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On August 14, the Commodity Futures Trading Commission (CFTC) approved two proposed amendments to margin requirements for Swap Dealers and Major Swap Participants (the “CFTC Margin Rule”). The first proposal would, among other changes, revise the method for determining whether an entity comes within the scope of the initial margin requirements under the CFTC Margin Rule and the timing for compliance. The second proposal would permit the application of separate minimum transfer amounts for initial and variation margin, as well as a minimum transfer amount of up to $50,000 for separately managed accounts. Each proposal will be subject to a 30-day comment period following publication in the Federal Register. Release.

CFTC Approves Final Swap Dealer Capital Rule

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On July 22, the Commodity Futures Trading Commission (CFTC) approved a final rule regarding new capital and financial reporting requirements for swap dealers and major swap participants that are not subject to supervision by a banking regulator and imposing financial reporting requirements for swap dealers and major swap participants generally. The final rule provides swap dealers and major swap participants three alternative methods to establish and meet minimum capital requirements depending on the characteristics of their business. The final rule also includes: a comprehensive model approval process; accompanying financial reporting, recordkeeping, and notification requirements; and a substituted compliance determination process for those swap dealers that may already be required to maintain capital in accordance with a foreign regulator. Release.

CFTC Staff Grants Time-Limited Extension of Swap Data Reporting Relief for Certain Swap Dealers and Major Swap Participants Established under the Laws of Australia, Canada, the European Union, Japan or Switzerland

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On November 30, 2017, the U.S. Commodity Futures Trading Commission‘s (“CFTC“) Division of Market Oversight announced in a no-action letter that it had extended relief it provided certain CFTC-registered swap dealers (“SD“) and major swap participants (“MSP“) in November 2016.  The no-action letter states that the Division of Market Oversight “will not recommend that the CFTC take an enforcement action against a non-U.S. SD or a non-U.S. MSP established in Australia, Canada, the European Union, Japan or Switzerland, that is not part of an affiliated group in which the ultimate parent entity is a U.S. SD, U.S. MSP, U.S. bank, U.S. financial holding company, or U.S. bank holding company, for failure to comply with the swap data reporting requirements of Part 45 and Part 46 of the CFTC’s regulations (SDR Reporting Rules), with respect to its swaps with non-U.S. counterparties that are not guaranteed affiliates, or conduit affiliates, of a U.S. person.”  The relief provided in the no-action letter is subject to certain terms and conditions as outlined in the letter, and is time-limited.  The Division of Market Oversight does not currently intend to extend the no-action relief beyond December 1, 2020. Release. No-Action Letter.

CTFC Approves Minimal Capital Requirements for Swap Dealers and Major Swap Participants

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On December 2, 2016, the U.S. Commodity Futures Trading Commission (CFTC) unanimously approved proposed rules that establish minimum capital requirements for swap dealers and major swap participants. The proposed rules set out minimum levels of qualifying capital for swap deals and major swap participants that are not subject to the capital rules of a prudential regulator. The comment period ends 90 days after publication of the proposal in the Federal Register. Release.

CFTC Approves Final Rule Amending the Timing for Filing Chief Compliance Officer Annual Reports by Certain Registrants

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On November 10, 2016, the U.S. Commodity Futures Trading Commission (the “CFTC“) issued a final rule modifying and clarifying previous guidance regarding compliance reports for futures commission merchants, swap dealers and major swap participants. Release.

CFTC Amends Swap Portfolio Reconciliation Requirement

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On May 2, 2016, the U.S. Commodity Futures Trading Commission approved a final rule to amend the swap portfolio reconciliation requirement.  Under CFTC Regulation 23.500(i), swap dealers and major swap participants were required to exchange all terms of swaps with their counterparties as part of the portfolio reconciliation exercise, but were only required to reconcile the material terms of swaps.  Amendments to the definitions of “portfolio reconciliation” and “material terms” now make it so that swap dealers and major swap participants need only exchange the material terms of swaps, so that the terms that are required to be exchanged are the same as those terms required to be reconciled.  Release.

CFTC Staff Announces Self-Executing Registration No-Action Relief for Delegating CPOs

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On October 15, CFTC Division of Swap Dealer and Intermediary Oversight (DSIO) announced that it is providing self-executing registration no-action relief for certain commodity pool operators (CPOs) who delegate certain activities (Delegating CPOs) to a registered CPO and meet the conditions specified.  The relief was made available in CFTC Staff Letter 14-126.  Release.  Staff Letter.

OCC Proposes Rule on Margin and Capital Requirements for Covered Swap Entities

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October 6, the OCC released a notice of proposed rulemaking to establish minimum requirements for the exchange of initial and variation margin between registered swap dealers, major swap participants, security-based swap dealers and major security-based swap participants (covered swap entities) and their counterparties to non-cleared swaps and non-cleared security-based swaps. Comments should be received on or before November 24. Press Release. NPR.

CFTC Issues Time-Limited No-Action Letter on Transaction-Level Requirements in Certain Cross-Border Situations

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On November 26, the CFTC issued a time-limited no-action letter that provides relief to swap dealers registered with the CFTC that are established under the laws of jurisdictions other than the United States from certain transaction-level requirements under the Commodity Exchange Act.  Press Release.  No-Action Letter.

CFTC Reminds Market Participants of Swap Data Reporting Requirements

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On March 8, the CFTC issued an Advisory reminding market participants that swap dealers were required to begin reporting data regarding equity, foreign exchange, and other commodity swaps, under Parts 43 and 45 of the CFTC’s regulations, on February 28.  Swap dealers must be in compliance with their reporting obligations with respect to historical swaps in these three asset classes by March 30.  CFTC Release.