CFTC (USA) Reporting Regulation

What is CFTC Reporting?

CFTC Reporting is a regulatory requirement arising from Dodd-Frank for firms to submit transaction reports on their over-the-counter derivatives trades (“swaps”) to a swap data repository approved by the Commodity Futures Trading Commission.

Timelines

The reporting obligation is now live for all counterparties, with the first firms having to report on 1st January 2013.

Who is affected by this regulation?

The reporting requirement is single-sided; only one counterparty to the trade has to report. Technically, any firm trading swaps in the USA could have a reporting obligation; however, some firms will not have a reporting requirement due to who their counterparty is.

The reporting counterparty is chosen according to a waterfall approach (below).

For swaps executed on a Swap Execution Facility or on a Designated Contract Market:

  • The Swap Execution Facility or Designated Contract Market must report the real-time data and primary economic terms of the trade (This always happens)
  • a CFTC-registered Swap Dealer (SD) who is a U.S. person (Highest priority for reporting)
  • a CFTC-registered Major Swap Participant (MSP) who is a U.S. person
  • a CFTC-registered SD who is NOT a U.S. person
  • a CFTC-registered MSP who is NOT a U.S. person
  • entities who are not SDs or MSPs: if the trade is cleared, they have no reporting obligation. If the trade is not cleared, they must report (Lowest priority for reporting)

For swaps executed off-market (not on a Swap Execution Facility nor on a Designated Contract Market):

  • a CFTC-registered Swap Dealer (SD) who is a U.S. person (Highest priority for reporting)
  • a CFTC-registered Major Swap Participant (MSP) who is a U.S. person
  • a CFTC-registered SD who is NOT a U.S. person
  • a CFTC-registered MSP who is NOT a U.S. person
  • financial entities who are not SDs nor MSPs
  • non-financial entities (Lowest priority for reporting)

Where the trade is between two non-U.S. parties of the same hierarchical level, the counterparties must confirm in writing with one another who must report.

Where the trade is between two parties who are both neither SDs nor MSPs, the financial entity has to report. If both are financial entities or both are non-financial entities, the two counterparties must confirm in writing with one another who must report.

Which trades need to be reported?

Only OTC derivatives from the following asset classes need to be reported:

  • Credit
  • Commodities, including weather and emissions
  • Equities
  • FX
  • Rates

There is also the requirement to report basic economic data in real time (or “as soon as technologically practicable” after execution), although the amount of data fields required for this is substantially smaller.

When is the deadline for reporting?

Unlike other jurisdictions such as EMIR, CFTC reporting requires firms to submit real-time reports as well as further transactional data at a later stage – this real-time component is also known as “Part 43” reporting (from the Code of Federal Regulations, Title 14, Part 43), with the corresponding non-real-time component known as “Part 45” reporting.

Part 43 reporting is always required to happen “as soon as technologically practicable”.

For Part 45 reporting, the regulatory deadline for reporting is convoluted; however, it primarily depends on two things: whether the swap is cleared, and whether it is traded on-market or off-market. The below outlines the reporting deadline for parties who are neither Swap Dealers nor Major Swap Participants (“non-SDs/non-MSPs”).

For non-SDs/non-MSPs for on-market cleared swaps: the non-SD/non-MSP has no reporting obligation.

For non-SDs/non-MSPs for on-market uncleared swaps:

  • T+1 for trade confirmation data, modifications and cancellations
  • Quarterly reporting of valuation data.
  • In this case, the non-SD/non-MSP does not have an obligation to report the primary economic terms of the trade (as the Swap Execution Facility/Designated Contract Market will report the primary economic terms instead).

For non-SDs/non-MSPs for off-market cleared swaps: here the non-SD/non-MSP will have no reporting obligation, UNLESS the swap wasn’t accepted for clearing within a specific timeframe (1 hour for swaps with a U.S. mandatory clearing obligation, 24 hours for swaps WITHOUT a U.S. mandatory clearing obligation). In this case, the non-SD/non-MSP will have an obligation to report primary economic terms data within the aforementioned specific timeframe.

For non-SDs for off-market uncleared swaps:

  • As soon as technologically practicable - primary economics terms data, although no later than within 1 hour for swaps with a U.S. mandatory clearing obligation, and 24 hours for swaps WITHOUT a U.S. mandatory clearing obligation
  • T+1 for trade confirmation data, modifications and cancellations
  • Quarterly reporting of valuation data

Overall, the nature of the reporting obligation, the deadline for reporting, and the lack of clarity make identifying the nature of your firm’s Dodd-Frank CFTC reporting obligation complicated; UnaVista can assist in rationalising and simplifying your operational processes for CFTC reporting. For more information on how UnaVista can help, please refer to the UnaVista CFTC reporting solution page

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