CFTC Approves Substituted Compliance on Capital Reporting for Non-US Swap Dealers

The CFTC approved four Orders "granting conditional substituted compliance in connection with the CFTC's capital and financial reporting requirements to certain CFTC-registered nonbank swap dealers ("SDs") organized and domiciled in Japan, Mexico, the European Union (France and Germany), or the United Kingdom." 

The Orders require that nonbank SDs file financial information with the CFTC and the National Futures Association, including periodic unaudited and annual audited financial statements, specific financial position information and notices of certain events. (See accompanying Fact Sheet.)

The Orders become effective upon their publication in the Federal Register. For several Order conditions, the CFTC will grant an additional compliance period of 180 calendar days. To rely on a comparability Order, an eligible non-US nonbank SD must notify the CFTC of its intention to satisfy the CFTC's capital and financial requirements by substituted compliance and receive a CFTC confirmation.

In an separate statement, CFTC Chair Rostin Behnam said the final Orders allow the Commission to "fully retain its enforcement and examination authority as well as its ability to obtain financial and event specific reporting to maintain direct oversight of nonbank SDs located in these four jurisdictions." He noted that the comparability determinations result in "the avoidance of duplicative requirements without a commensurate benefit to the [CFTC's] oversight function."