CFTC Alert! CFTC Approves Final DCO Reporting and Information Requirement and Three Proposals at the Commission Open Meeting.
CFTC Approves Final DCO Reporting and Information Requirement and Three Proposals at the Commission Open Meeting: update information requirements associated with commingling customer funds and positions in futures and swaps in the same account approved, among other items.
Sources:
- Final Rule: Reporting and Information Requirements for Derivatives Clearing Organizations
- Proposed Rule: Swap Confirmation Requirements for Swap Execution Facilities
- Proposed Rule: Amendments to Provisions Common to Registered Entities
- Proposed Rule: Margin Requirements for Uncleared Swaps for Swap Dealers and Major Swap Participants
Wut mean?:
- CFTC approved a rule updating reporting requirements for Derivatives Clearing Organizations (DCOs).
- This rule modifies regulations concerning customer funds and their positions in futures and swaps, alters some daily and specific event reporting criteria, and sets out details DCOs must provide daily.
- It also amends some delegation provisions.
- The rule takes effect 30 days post its Federal Register publication.
- DCOs have 18 months post-publication to comply with specific amendments, but must adhere to all other rule changes within 30 days of the rule's publication.
Wut mean?:
- CFTC has a regulation, ยง 37.6(b), which mandates that a Swap Execution Facility (SEF) provides each party of a swap transaction with a written record or โconfirmationโ detailing all the terms at the time of execution.
- For uncleared swaps, many terms are pre-negotiated and documented between parties before the transaction.
- Originally, for compliance with ยง 37.6(b), SEFs could refer to these pre-negotiated terms, but only if the agreements had been submitted to the SEF before the swap execution.
- SEFs reported difficulties in collecting and storing all the bilateral transaction agreements from the numerous individual parties, especially given the diversity of these agreements across asset classes.
- CFTC staff granted leniencies allowing SEFs to reference applicable terms from pre-negotiated agreements in confirmations for uncleared swaps without needing to maintain copies of these agreements or obtaining them before a swap execution.
Wut mean?:
- Part 40 outlines the procedure for registered entities to self-certify or request approval for their rules, amendments, and introduction of new products for trading and clearing.
- Can comment on this proposed rule for 60 days after it's published in the Federal Register.
Wut mean?:
CFTC has given approval for a proposed amendment to the margin requirements for uncleared swaps concerning swap dealers (SDs) and major swap participants (MSPs) that don't have a prudential regulator. The changes would:
- Alter the "margin affiliate" definition so that certain investment funds (seeded by a sponsor) are considered to have no margin affiliates. This relates to calculating thresholds that determine when initial margin (IM) has to be exchanged for uncleared swaps.
- This change would exempt SDs and MSPs from the need to post and collect IM with specific qualified seeded funds for their uncleared swaps, lasting up to three years from when the fund first starts its investments.
- The rule also proposes removing a clause that prevents certain investment funds (like money market funds) that transfer assets through specific methods from using their securities as eligible IM collateral. This increases the types of assets that can be considered valid collateral.
- A previously missing footnote will be added to the Commission Regulation regarding haircut schedules.
Feedback on this rule is invited for 60 days post its publication in the Federal Register.
TLDRS:
- CFTC Approves Final DCO Reporting and Information Requirement and Three Proposals at the Commission Open Meeting
