CFTC Extends Exemptive Relief to SEFs for Allocation Information Requirements

The CFTC Division of Market Oversight ("DMO") extended previously issued relief (see CFTC Letter 17-54) to swap execution facilities ("SEFs") from certain requirements related to post-execution allocation information.

As previously covered, SEFs are generally required to collect audit trail data to identify and take action in response to market abuses under CFTC Rule 37.205(a). This requirement is also addressed in CFTC Rule 37.205(b)(2) ("Audit Trail - Transaction history database"). In the request for relief, the parties reiterated that SEFs cannot capture such post-execution allocation data in their audit trail, since trade allocations generally occur between the clearing firm, or the customer, and the derivatives clearing organization. As a result, SEFs do not have access to the relevant data. Even if it were possible to obtain the data, the parties asserted, the technological infrastructure necessary to accommodate transmittal is not currently in place.

The DMO agreed to extend the relief from these audit trail requirements, subject to the following conditions:

• the SEF must institute a rule requiring market participants to provide post-execution allocation information if the CFTC directs the SEF to request such information; and

• if the CFTC directs the SEF to obtain such information, the SEF must request, obtain and review the information as part of its investigation.

The relief will expire on the earlier of (i) November 15, 2021, or (ii) the effective or compliance date of a permanent CFTC action providing a solution for post-execution allocation information audit trail obligations for SEFs.