On December 4, 2015, President Obama signed into law H.R. 22, commonly known as the Fixing America's Surface Transportation Act (Fast Act). Although the FAST Act is primarily aimed at improving America’s surface transportation infrastructure, it includes a provision designed to address a Dodd-Frank rule requiring non-US regulators to indemnify US swap data repositories (SDRs) and the CFTC before being granted access to data. This requirement has limited global transparency, frustrating one of the primary goals of the Dodd-Frank Act.

The Dodd-Frank Act created the requirement to compile data on global swaps transactions that are regulated by the CFTC into SDRs in order to provide a greater level of transparency. However, Commodity Exchange Act (CEA) Section 21(d), which was added to the CEA by the Dodd-Frank Act, requires that any regulator, including US regulators, seeking access to data held in an SDR registered with the CFTC as required by the Dodd-Frank Act must first agree in writing to:

Follow the CEA's confidentiality requirements.

Indemnify the SDR and the CFTC for any expenses stemming from litigation related to the data provided by the SDR.

These indemnification and confidentiality obligations have frustrated the intent of the Dodd-Frank Act and impeded transparency in the swaps market by providing a reason for foreign regulators to create separate and, in some cases, duplicative SDRs to avoid these indemnification and confidentiality requirements.

In May 2012, the CFTC attempted to fix this by issuing a proposed interpretive statement that proposed to exempt certain foreign regulators from the Dodd-Frank Act's indemnification and confidentiality provisions in connection with requests for swap data from SDRs registered with the CFTC (see Legal Update, CFTC Proposes Swap Data Exemption for Foreign Regulators from Dodd-Frank Indemnification and Confidentiality Provisions).

A final interpretative guidance was issued in October 2012, and helped to improve transparency in the swaps market by allowing foreign regulators access to swap data held in SDRs, for swaps in which they have an independent and sufficient regulatory interest, subject to certain conditions.

Section 86001 of the FAST Act attempts to solve this problem by eliminating the indemnification requirement and instead requiring entities to provide a written agreement ensuring compliance with certain statutory confidentiality obligations. The goal of this replacement is to provide the level of transparency into global counterparty credit exposure that was originally intended under the Dodd-Frank Act.

ISDA has praised this fix as a "big step towards the sharing of derivatives transaction data across borders … [for] enhancing transparency and enabling regulators to better monitor risk exposure and market activity." However, ISDA also points out the need for further changes to Dodd-Frank to improve the reporting of data between foreign counterparties.

ISDA notes that the CFTC No-action Letter 15-01 temporarily allows reporting parties to "mask" identifying information that would intrinsically reveal the identity of the counterparty or its affiliated group and which is subject to statutory or regulatory prohibitions of one of the enumerated jurisdictions (see Legal Update, CFTC Extends Relief on Reporting of Certain Prohibited Information under Dodd-Frank Swaps Rules). Yet a global fix is still necessary to extend this protection to all jurisdictions and provide for fully transparent swaps reporting regime.

According to ISDA, the Financial Stability Board (FSB) has recognized this issue and set deadlines for FSB member jurisdictions to:

However, a fix is still necessary for non-FSB member firms to avoid either breaching domestic secrecy laws or violating Dodd-Frank requirements.