CFTC Issues Time-Limited No-Action Relief from Portfolio Reconciliation Requirements; Applies to All SDs and MSPs (Letter 13-40) (with Lofchie Comment)

The CFTC's Division of Swap Dealer and Intermediary Oversight ("DSIO") announced the issuance of a no-action letter relating to the portfolio reconciliation requirements imposed on swap dealers ("SDs") and major swap participants ("MSPs") pursuant to CFTC Rule 23.502.

The relief, which was granted based on the fact that as a practical matter it was impossible to comply with the requirements of the rule, is available to all SDs and MSPs until August 23, 2013.

Lofchie Comment:The process of setting deadlines that will likely require further extension is inefficient from the standpoint of both the regulator and market participants. A better approach might be to suspend the rule until the relevant technology is available and, once the technology becomes available, to establish a new effective date that can be reasonably achieved, giving consideration to all of the other new rule requirements.

See: CFTC Letter 13-40.