CFTC Issues Time-Limited No-Action Relief Regarding Certain Recordkeeping Obligations

The CFTC’s Division of Swap Dealer and Intermediary Oversight (DSIO) announced the issuance of time-limited no-action relief for swap dealers (SDs) and major swap participants (MSPs) concerning certain recordkeeping obligations under Part 23 of the CFTC’s Regulations.  The no-action letter will delay until March 31, 2013, the compliance date for the following provisions:

(1) The requirement that SDs and MSPs make and keep records of all oral communications related to pre-execution swap trade information (and communications that lead to the conclusion of a related cash or forward transaction), pursuant to Commission Regulations 23.202(a) and (b);

(2) The requirement that SDs and MSPs maintain all transaction records and daily trading records in a manner “identifiable and searchable” by transaction and counterparty, pursuant to Commission Regulations 23.201(a)(1), 23.202(a) and 23.202(b);

(3) The requirement that SDs and MSPs use a Coordinated Universal Time timestamp when recording quotations prior to and at the time of execution of a swap, pursuant to Commission Regulations 23.202(a)(1)(ii), (a)(2)(iv), (b)(3) and (b)(4); and

(4) The requirement that SDs and MSPs retain swap records at their principal places of business or such other principal offices as designated by the SDs or MSPs.

The relief provided in the no-action letter is available to all SDs and MSPs.


Lofchie Comment:  The no-action relief alludes to a number of the problems that have surfaced with the CFTC’s rules including the following: (i) in certain instances, there is “[no] technology . . . currently readily available” that would allow firms to comply; e.g., compliance may in fact be impossible; (ii) in certain instances, complying with the requirements of the CFTC would result in a violation of non-U.S. law (referred to in the letter as inconsistent with principles of “international comity”); and (iii) in certain instances, the requirements of the rule are “ambiguous and, as a result may present Firms with significant impementation challenges depending on how . . . [the Rule] is interpreted.” 
     While it is obviously a positive that the no-action letter was issued, the letter also raises questions as to the rulemaking process.

See: CFTC Letter No. 12-29.


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