CFTC Grants Temporary Large-trader Swap Reporting Exemption | Practical Law

CFTC Grants Temporary Large-trader Swap Reporting Exemption | Practical Law

The CFTC's Division of Market Oversight issued a letter providing temporary no-action relief until July 27, 2012 for less than fully compliant ownership reporting of positions under the CFTC's large-trader reporting system for physical commodity swaps and swaptions.

CFTC Grants Temporary Large-trader Swap Reporting Exemption

Practical Law Legal Update 2-520-4147 (Approx. 3 pages)

CFTC Grants Temporary Large-trader Swap Reporting Exemption

by PLC Finance
Published on 19 Jul 2012 • USA (National/Federal)
The CFTC's Division of Market Oversight issued a letter providing temporary no-action relief until July 27, 2012 for less than fully compliant ownership reporting of positions under the CFTC's large-trader reporting system for physical commodity swaps and swaptions.
On July 2, 2012, the CFTC's Division of Market Oversight issued a no-action letter providing temporary relief from the requirements of so-called "ownership reporting" of ownership of positions in physical commodity swaps and swaptions contained in the CFTC's large-trader reporting rules. The letter provides that clearing members now have until July 27, 2012 to reach full compliance with the final Dodd-Frank large-trader reporting rules. As a condition to the relief, clearing members must submit, by July 30, 2012, fully compliant daily ownership reports dating back to July 2, 2012.
Dodd-Frank large-trader reporting framework was put in place to complement the data reporting the CFTC has traditionally received on large positions in all physical commodity futures and option contracts traded on major derivatives exchanges called designated contract markets (DCMs). Without the Dodd-Frank large-trader rules, there would have been no system in place for the reporting of data on contracts not traded on DCMs that are economically equivalent to physical commodity futures and option contracts.
The large-trader reporting rules require daily ownership reports of positions in physical commodity swaps and swaptions from "clearing organizations," clearinghouse clearing members and swap dealers (SDs). This includes most major financial institutions operating in the US. These reports are filed electronically and contain:
  • For clearing organization reports, separately for each clearing member's proprietary and customer account, and in a single data record, the data elements specified on page 43863 of the final large-trader reporting rules.
  • For clearing member and SD reports, separately for each reportable position in a consolidated account, and in a single data record, the elements specified on page 43864 of the final large-trader reporting rules.
The rules took effect on September 20, 2011, but previous no-action relief had extended the date for full compliance to July 2, 2012.
As a condition to the relief, clearing members must submit, by July 30, 2012, fully compliant daily ownership reports dating back to July 2, 2012.
The temporary relief is intended to provide sufficient time for the industry to transition to fully compliant ownership reporting.
For more information on position limits for physical commodity futures and swaps, see Legal Update, CFTC Approves Final Position Limits for Physical Commodity Futures and Swaps under Dodd-Frank.
For more information on derivatives regulation under the Dodd-Frank Act, see Practice Note, Summary of the Dodd-Frank Act: Swaps and Derivatives.