CFTC Issues Time-Limited No-Action Relief Permitting Parts 20, 45 and 46 Reporting Counterparties to Mask Identifying Information Pursuant to Non-U.S. Law (Letter 13-41) (with Lofchie Comment)

The CFTC's Division of Market Oversight ("DMO") issued a letter providing reporting parties under CFTC Rules Parts 20 ("Large Trader Reporting for Physical Commodity Swaps"), 45 ("Swap Data Recordkeeping and Reporting Requirements"), and 46("Swap Data Recordkeeping and Reporting Requirements: Pre-Enactment and Transition Swaps"), with time-limited no-action relief from requirements to report certain identifying information regarding their counterparties in specific jurisdictions. This no-action letter addresses Legal Entity Identifiers ("LEIs"), other identifying swap data fields pursuant to Parts 45 and 46, and large swap trader counterparty identification information pursuant to Part 20.

To avail themselves of the relief, reporting parties must first meet specific criteria set forth in the no-action letter, and must also comply with certain conditions attached to the relief. The no-action letter permits reporting parties to fulfill their reporting obligations while acknowledging privacy, secrecy and blocking laws in certain non-U.S. jurisdictions, provided that specific conditions are met, including that the party requesting relief must have submitted a letter containing certain specified information to its local regulator and received in return a letter from the regulator providing certain responses.

The relief expires no later than June 30, 2014.

Lofchie Comment: This is an unusual letter that seems to impose a process on non-U.S. regulators that is needlessly burdensome. For example, there seems no reason why each firm should have to submit a letter or why the non-U.S. regulator should be required to respond to each firm individually. Likewise, it seems a short deadline for the CFTC to impose a 60-day response requirement on each non-U.S. regulator, particularly as this time period includes that given to the individual firms to make the relevant requests of their governments. Further, responses by the relevant governments must be given in English, which could possibly cause further delay where the non-U.S. regulators do not conduct their affairs in English.

See: CFTC Letter 13-41.