CFTC No-Action Relief Concerning Bespoke or Complex Swaps (with Lofchie Comment)

The CFTC Division of Market Oversight (DMO) announced the issuance of a time-limited no-action letter granting relief, for bespoke or complex swaps, from certain reporting obligations under CFTC Rules Parts 43and 45. The relief expires the earlier of the time that it is no longer required or June 30, 2013. The no-action letter provides that DMO will not recommend enforcement action against either (i) a reporting party for failure to report certain data fields required by Part 43, or (ii) a reporting counterparty for failure to report certain data fields required by Part 45. The letter further provides no-action relief from certain confirmation data reporting obligations under Part 45 for certain bespoke or complex swaps that are uncleared inter-affiliate swaps.

Lofchie Comment: According to the letter, the reason for the delay is that the relevant technology does not support providing the relevant data. Accordingly, I am puzzled by the expiration of the deadline on June 30, 2013. Wouldn't it make more sense to wait until the technology is available, and then announce that the relief is withdrawn following some appropriate notice period? Likewise, it is the implication of the letter that the relief expires the day that the technology is available. But, as a practical matter, don't firms need some time to adjust their operations following the time technology is available?Effectively, my questions echo Commissioner O'Malia's suggestion, in today's news, that no-action letters should not be issued at the last minute before compliance is mandated. On the back end, no-action letters should not be withdrawn the very day that a technology problem is solved: in the physical world, firms still need time to modify their operations.

See: 12-39: Part 43 and Part 45: §§ 43.3(a); 43.4(a); Appendix A to Part 43; 45.3(b)(1); 45.3(b)(3); 45.3(c)(1)(i); 45.3(c)(1)(iii); 45.3(c)(2)(i); 45.3(c)(2)(iii); 45.3(d)(1); 45.3(d)(3); 45.4(c); and Appendix 1; No-Action