CFTC Issues No-Action Relief Regarding Trade Confirmation Requirements, Reporting and Erroneous Swap Trades (CFTC Letters 15-24 and 15-25)

The CFTC Division of Market Oversight and the Division of Clearing and Risk issued no-action time-limited relief to swap execution facilities ("SEFs") and designated contract markets ("DCMs") from certain CFTC rules. The relief allows trades that were voided because of certain errors to be corrected. The CFTC also issued relief from certain trade confirmation requirements for non-cleared swaps.

Separately, the Division of Market Oversight issued no-action relief to SEFs from certain trade confirmation requirements for non-cleared swaps. According to the CFTC, the no-action letters support the development of SEFs and the trading of swaps on SEFs and DCMs.

Specifically, CFTC Letter 15-24 provides conditional compliance relief that permits SEFs and DCMs to correct clerical or operational errors that cause swaps to be rejected for clearing and become void ab initio. The relief allows counterparties to resubmit trades with the correct terms. Additionally, the relief permits (i) SEFs and DCMs to correct clerical or operational errors discovered after a swap has been cleared and (ii) counterparties to execute a trade to offset the cleared trade or submit a new trade with the correct terms. The relief is subject to terms and conditions in the no-action letter and will expire on June 15, 2016.

CFTC Letter 15-25 extends the time period for relief provided previously in Letter 14-108 until March 31, 2016, but with certain modifications. The relief authorizes SEFs to incorporate terms by reference from previously negotiated agreements, such as ISDA Master Agreements, without first obtaining copies of such agreements. The letter also provides related recordkeeping and reporting relief, subject to certain conditions.

See: CFTC Letter 15-24; CFTC Letter 15-25; CFTC Press Release.