ICE to Discontinue Swap Data Reporting for Certain Transactions
The Intercontinental Exchange ("ICE") announced that, as of the close of business on July 14, 2016, ICE Futures U.S. ("IFUS") and ICE Futures Europe ("IFEU") will discontinue reporting swap data to a swap data repository ("SDR") on behalf of market participants that execute an exchange of futures for swaps ("EFS") or an exchange of options for options ("EOO") transaction. Because of this change, market participants must make arrangements as of July 14, 2016 to report the swap component of the EFS/EOO to an SDR, and must continue to ensure that the EFS/EOO will be reported to the exchanges in accordance with IFUS and IFEU rules.
CFTC Regulations Parts 43 and 45 concerning swap-reporting requirements apply to the swap component of EFS and EOO transactions. Since March 2013, IFUS and IFEU have reported the swap component of an EFS/EOO transaction in order to assist market participants' compliance with the requirements of Parts 43 and 45. Due to the CFTC's recent efforts to standardize data reported to SDRs, ICE decided to discontinue its swap reporting service for EFS/EOO transactions. In December 2015, the CFTC released draft technical specifications that, according to ICE, "require substantial changes to the data currently collected at the time of execution and submission of EFS and EOO transactions." For that reason, ICE determined that its current process for reporting EFS and EOO swap data would not be fully compliant with the CFTC's proposed requirements. However, ICE also stated that it would continue to report swap data for all transactions executed on its swap execution facility, ICE Swap Trade.
Commentary
This announcement means that additional reporting will be required of market participants executing EFS/EOO transactions on ICE. Prior to the announcement, market participants posted EFS/EOO transactions to the ICE exchange alone, and the exchange reported the swap component of the transactions to an SDR. Beginning on July 14, 2016, market participants must continue to post their EFS/EOO to the exchange, but also must arrange to report the swap components of the transactions to an SDR.
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