CFTC Amends Swap Confirmation Requirements
The CFTC amended its swap execution facility ("SEF") regulations related to uncleared swap confirmations. (See related coverage.)
The amendments, which codify no-action relief originally granted in CFTC Letter No. 17-17, make changes to CFTC Rule 37.6 ("Enforceability") and a conforming revision to Rule 23.501 ("Swap Confirmation"). The amendments are intended to address practical issues with obtaining copies of relationship documentation between persons executing swaps on a SEF. In addition, the amendments fix technical problems with the timing aspects of the rules (e.g., by making confirmation required as soon as technologically practicable after execution, rather than "at the same time as execution").
This rule becomes effective 30 days after publication in the Federal Register.
Statements
- CFTC Chairman Rostin Behnam stated that the rule is an "example of my continuing focus on providing market participants with clarity and certainty by, where possible, codifying existing staff no-action positions."
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CFTC Commissioner Kristin N. Johnson noted that it was important for both SEFs and the Commission to have the ability to obtain essential information, including copies of the underlying agreements for uncleared swaps. She supported the final rule for "provid[ing] a practical approach to implementing our regulatory requirements, while maintaining robust oversight of SEFs and our markets."
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CFTC Commissioner Summer K. Mersinger vowed to "push the agency to act through notice-and-comment rulemaking, rather than relying on perpetual staff no-action relief, with respect to other rules that are not workable for those who must comply with them – especially where, as here, their asserted benefits are largely illusory."
- CFTC Commissioner Caroline D. Pham argued that "conflicting or impossible regulatory requirements can make compliance with our rules nonsensical," which is "clear from the years of CFTC staff no-action relief that led to the rule amendments codified today in the SEF Confirmation Final Rule." She encouraged the CFTC to continue to fix "unworkable aspect[s]" of existing rules when market participants identify these problems in the future.