CFTC Staff Provides Guidance as to ''Firm or Forced Trades'' Process by Derivatives Clearing Organizations

The use of a "firm or forced trades" process to determine the price of certain swaps for which public market prices are not available will not, by itself, require a derivatives clearing organization ("DCO") to register as a swap execution facility. This CFTC interpretative guidance expresses the views of the Division of Clearing and Risk and Division of Market Oversight.

CFTC Letter No. 15-51 also states that a swap generated as a result of such a process would not be subject to the clearing and trade execution requirements of the Commodity Exchange Act. The DCO would be the reporting counterparty for swaps created by the firm or forced trades process for purposes of Part 45 of the CFTC Rules ("Swap Data Recordkeeping and Reporting Requirements").