Cross-Border Swaps Deal to End U.S., EU Regulation Overlap


U.S. and European Union financial regulators broke a deadlock over rules for the $633 trillion global swaps market, saying the accord will protect banks from overlapping requirements and additional costs. The U.S.

via Pocket http://www.bloomberg.com/news/2013-07-11/cross-border-swaps-deal-to-end-u-s-eu-regulation-overlap.html July 11, 2013 at 07:51PM

[The Swap Report] Where can I find the “official” list of CFTC registered swap dealers and major swap participants?


OFFICIAL CFTC SWAP DEALERS LIST
http://www.cftc.gov/LawRegulation/DoddFrankAct/registerswapdealer

OFFICIAL CFTC MAJOR SWAP PARTICIPANTS
http://www.cftc.gov/LawRegulation/DoddFrankAct/registermajorswappart

Swap Reporting (Summary Chart of Reporting Compliance): Who and When? – courtesy of FIA


http://www.futuresindustry.org/futures-industry.asp?iss=210&a=1558

One key provision of the Dodd-Frank Act requires reporting of over-the-counter swap transactions. The Commodity Futures Trading Commission has finalized detailed regulations in this area that are being implemented in phases. This article outlines the CFTC’s OTC reporting compliance timeline.

In late 2011 and early 2012, the CFTC finalized a series of regulations related to the reporting of swap transactions: rules governing reporting to the public, rules governing reporting to data repositories and the CFTC itself, and rules governing reporting of “historical swaps.” For all their complexity—these rules and their corresponding releases total more than 200,000 words—one aspect was relatively simple: the dates on which reporting was set to begin. Specifically, the reporting rules set three “compliance dates” for reporting:

Starting on Compliance Date One, reporting would be required for interest rate swaps and credit default swaps where at least one of the counterparties was a swap dealer or a major swap participant;

  • Ninety days later, on Compliance Date Two, reporting would be required for all other swap transactions where at least one of the counterparties was a swap dealer or MSP; and
  • Ninety days later, on Compliance Date Three, reporting would be required for all other swaps—those for which neither counterparty was a swap dealer or MSP.
  • The exact dates of Compliance Dates One, Two and Three were tied to the publication of key swaps definitional rules.

In the intervening year, these simple rules transformed into the complex timeline summarized in the accompanying chart. Below, as a supplement to the chart, we attempt to rationalize the resulting reporting structure by dividing the characteristics that establish when a particular swap must be reported along three lines: the type of reporting, the type of counterparties, and the type of swap.

Type of Reporting

Dodd-Frank requires three types of reporting of swap transactions:

     

  • SDR Reporting. Under these requirements, swap counterparties must report a host of information about swaps to new “swap data repositories” registered with the CFTC, both upon creation and throughout the life of the swap. The CFTC, but not the public, will have access to the full complement of information stored at SDRs. Mandatory SDR reporting began on Dec. 31, 2012.
  • Real-Time Reporting. Under the “real-time reporting” requirements, key information about swaps must be publicly disseminated via SDRs. This information is rendered anonymous to protect the identity of the counterparties. Delays in reporting are allowed for large “block” transactions. Until “block” is more fully defined, all swaps are subject to the “block” delay. Mandatory real-time reporting began on Dec. 31, 2012.
  • Historical Swap Reporting. SDR reporting upon execution and real-time reporting are only required for new swaps and, in some cases, material amendments to existing swaps entered into after the relevant compliance date. However, counterparties to “historical swaps” entered into before those compliance dates are required to report information to SDRs. The scope of the information reported depends on when the swap was entered into and terminated, but at a minimum, some information is required for any swap that was in existence on or after July 21, 2010. Mandatory historical swap reporting began on Jan. 30, 2013.

Under the CFTC’s final reporting rules, all three types of reporting were to begin on the same date for any given swap type and counterparty pair. Over the past year, that paradigm has changed in two key ways. First, based on input from market participants, the CFTC decided to delay historical swap reporting until 30 days after SDR reporting is required for the particular swap type and counterparty pair. Second, as discussed further below, the CFTC chose to separate SDR reporting and real-time reporting in the context of the cross-border application of swap requirements. As a result, market participants must now consider each of these three types of reporting separately when determining which requirements must be complied with and by when.

Type of Counterparties

The CFTC’s final swap reporting rules divide transactions into those where at least one counterparty is a swap dealer or MSP, and those where neither counterparty is a swap dealer or MSP, for purposes of determining compliance timing. While transactions between affiliates will generally be subject to reporting requirements, the real-time reporting release includes a limited exception for certain types of inter-affiliate trades.

In June 2012, the CFTC proposed cross-border guidance, and a related proposed exemptive order, that describe the application of swap rules, including reporting rules, to transactions. The CFTC has since adopted a final exemptive order that applies until July 2013, but has not yet adopted final guidance. While the full details of these cross-border releases are beyond the scope of this article, they generally divide counterparties into five groups for purposes of reporting:

     

  • swap dealers and MSPs that are “U.S. persons;”
  • swap dealers and MSPs that are not “U.S. persons,” which are further subdivided into those that do and do not have U.S. person parents with certain regulatory statuses;
  • non-U.S. branches of swap dealers and MSPs that are “U.S. persons;”
  • “U.S. persons” that are not swap dealers or MSPs (i.e., U.S. end-users); and
  • non-“U.S. persons” that are not swap dealers or MSPs (i.e., non-U.S. end-users).

Under the final exemptive order, the extent to which, and the date on which, the three types of reporting apply depends on how the counterparties are categorized and which type of reporting is in question.

Type of Swap

The CFTC’s final swap reporting rules established different reporting dates for CDS and IRS, on one hand, and commodity, equity, foreign exchange or other swaps, on the other, where at least one counterparty is a swap dealer or MSP.

In November 2012, as permitted by the Dodd-Frank Act, Treasury Secretary Timothy Geithner exempted “foreign exchange forwards” and “foreign exchange swaps,” as defined in Dodd-Frank, from the vast majority of Dodd-Frank swaps rules. In the reporting arena, these instruments remain subject to SDR and historical reporting, but are exempt from real-time reporting. Other foreign exchange derivatives, including non-deliverable forwards and foreign exchange options, remain subject to all swap rules, including real-time reporting.

Over the course of the past several months, the CFTC staff has issued a series of no-action letters providing specific relief meant to solve a number of reporting concerns. This includes relief related to bespoke and complex swaps, swaps in emerging market jurisdictions, cleared swaps, and swap reporting that implicates privacy concerns for counterparties in certain non-U.S. jurisdictions. The specific contours of this relief is beyond the scope of this article, but market participants should carefully consider whether any specific relief is applicable to their swap transactions or the reporting of certain data elements.

Finally, though not specific to reporting, the CFTC has announced that it does not intend to bring an enforcement action against a swap dealer or MSP for failing to fully comply with Dodd-Frank swaps requirements before July 12, 2013 if that failure stems from a practical or technical impediment to compliance or uncertainty interpreting Dodd-Frank requirements. The market participant must act reasonably and in good faith to fully comply with the requirement, including demonstrating progress towards compliance, identification of issues as soon as reasonably possible, elevation of issues to senior management and, to the extent necessary, timely consultation with the CFTC and other industry participants. It seems likely that market participants will benefit from such an enforcement posture for some of the highly technical problems currently faced with respect to swap reporting.

 

Summary Chart of Reporting Compliance
Dates as of Feb. 20, 20131
One party is: The other party is: Interest Rate Swaps / Credit Default Swaps “Foreign Exchange Swaps” and “Foreign Exchange Forwards” Other Foreign Exchange Derivatives, Equity Swaps, Commodity Swaps and Other Swaps
A U.S. person that is a swap dealer or MSP2 Any counterparty SDR Reporting: 12/31/12  

Real-Time Reporting: 12/31/12

Historical Swap Reporting: 1/30/13

SDR Reporting: 2/28/13

Real-Time Reporting: Not required under the Treasury Exemption

Historical Swap Reporting:  3/30/13

SDR Reporting: 2/28/13

Real-Time Reporting: 2/28/13

Historical Swap Reporting:  3/30/13

A non-U.S. branch of U.S. swap dealer or MSP (“Non-U.S. Branch”) A U.S. person (other than another Non-U.S. Branch) SDR Reporting: 12/31/12

Real-Time Reporting: 12/31/12

Historical Swap Reporting:  1/30/13

SDR Reporting: 2/28/13

Real-Time Reporting: Not required under the Treasury Exemption

Historical Swap Reporting:  3/30/13

SDR Reporting: 2/28/13

Real-Time Reporting: 2/28/13

Historical Swap Reporting:  3/30/13

A non-U.S. person or Non-U.S. Branch SDR Reporting: 12/31/12

Real-Time Reporting: Not currently required under the cross-border exemptive order3

Historical Swap Reporting:  1/30/13

SDR Reporting: 2/28/13

Real-Time Reporting: Not required under the Treasury Exemption

Historical Swap Reporting:  3/30/13

SDR Reporting: 2/28/13

Real-Time Reporting: Not currently required under the cross-border exemptive order

Historical Swap Reporting:  3/30/13

A non-U.S. swap dealer or MSP with a U.S. ultimate parent4 A U.S. person (other than a Non-U.S. Branch) SDR Reporting: 12/31/12

Real-Time Reporting: 12/31/12

Historical Swap Reporting:  1/30/13

SDR Reporting: 2/28/13

Real-Time Reporting: Not required under the Treasury Exemption

Historical Swap Reporting:  3/30/13

SDR Reporting: 2/28/13

Real-Time Reporting: 2/28/13

Historical Swap Reporting:  3/30/13

A non-U.S. person or Non-U.S. Branch SDR Reporting: 12/31/12

Real-Time Reporting: Not currently required under the cross-border exemptive order

Historical Swap Reporting:  1/30/13

SDR Reporting: 2/28/13

Real-Time Reporting: Not required under the Treasury Exemption

Historical Swap Reporting:  3/30/13

SDR Reporting: 2/28/13

Real-Time Reporting: Not currently required under the cross-border exemptive order

Historical Swap Reporting:  3/30/13

A non-U.S. swap dealer or MSP without a U.S. ultimate parent A U.S. person SDR Reporting: 12/31/12

Real-Time Reporting: 12/31/12

Historical Swap Reporting:  1/30/13
       
   

SDR Reporting: 2/28/13

Real-Time Reporting: Not required under the Treasury Exemption

Historical Swap Reporting:  3/30/13

SDR Reporting: 2/28/13

Real-Time Reporting: 2/28/13

Historical Swap Reporting:  3/30/13
       
   

A non-U.S. Branch SDR Reporting: 12/31/12

Real-Time Reporting: Not currently required under the cross-border exemptive order

Historical Swap Reporting:  1/30/13

SDR Reporting: 2/28/13

Real-Time Reporting: Not required under the Treasury Exemption

Historical Swap Reporting:  3/30/13

SDR Reporting: 2/28/13

Real-Time Reporting: Not currently required under the cross-border exemptive order

Historical Swap Reporting:  3/30/13

A non-U.S. person SDR Reporting: Not currently required under the cross-border exemptive order

Real-Time Reporting: Not currently required under the cross-border exemptive order

Historical Swap Reporting: Not currently required under the cross-border exemptive order

SDR Reporting: Not currently required under the cross-border exemptive order

Real-Time Reporting: Not required under the Treasury Exemption

Historical Swap Reporting: Not currently required under the cross-border exemptive order

SDR Reporting: Not currently required under the cross-border exemptive order

Real-Time Reporting: Not currently required under the cross-border exemptive order

Historical Swap Reporting: Not currently required under the cross-border exemptive order

A U.S. end user A U.S. end user SDR Reporting: 4/10/13

Real-Time Reporting: 4/10/13

Historical Swap Reporting: 4/10/13

SDR Reporting: 4/10/13

Real-Time Reporting: Not required under the Treasury Exemption

Historical Swap Reporting: 4/10/13
   

SDR Reporting: 4/10/13

Real-Time Reporting: 4/10/13

Historical Swap Reporting: 4/10/13
   

A non-U.S. end user SDR Reporting: 4/10/13

Real-Time Reporting: 4/10/13

Historical Swap Reporting: 4/10/13

SDR Reporting: 4/10/13

Real-Time Reporting: Not required under the Treasury Exemption

Historical Swap Reporting:  4/10/13

SDR Reporting: 4/10/13

Real-Time Reporting: 4/10/13

Historical Swap Reporting:  4/10/13

A non-U.S. end user A non-U.S. end user SDR Reporting: Not required

Real-Time Reporting: Not required

Historical Swap Reporting: Not required

SDR Reporting: Not required

Real-Time Reporting: Not required under the Treasury Exemption

Historical Swap Reporting:  Not required

SDR Reporting: Not required

Real-Time Reporting: Not required

Historical Swap Reporting: Not required

     

  1. This chart is a general summary of applicable reporting deadlines and is not meant as legal advice.  The dates cited are subject to change.  In addition, a number of specific exceptions are not reflected in this chart, including for certain trades between affiliates. 
  2. For the purposes of this chart, we assume that a person that will register as a swap dealer or MSP has registered by Dec. 31, 2012.  A person who registers after such date will be subject to the SDR and real-time reporting requirements applicable to a swap dealer on the earlier of (i) the date they would be required to register and (ii) April 10, 2013.  The same person will be subject to historical swap reporting requirements on the earlier of (i) 30 days after becoming subject to SDR and real-time reporting requirements and (ii) April 10, 2013. 
  3. The cross-border exemptive order expires on July 12, 2013, absent further action by the CFTC. 
  4. Specifically, an ultimate parent that is a U.S. swap dealer, MSP, bank, financial holding company or bank holding company.
Annette L. Nazareth is a partner and Gabriel D. Rosenberg is an associate at Davis Polk in the firm’s financial institutions group.

CFTC Offers Non-Swap Dealers (Some) Relief From (Some) Swap Reporting Requirements: The “Who, What, When, Where, Why” of CFTC Letter 13-10


Summary:
By Andrew Cross and Tom Watterson, Reed Smith LLP INTRODUCTION The CFTC just released (less than 7 hours before the deadline) CFTC Letter No. 13-10 providing no action relief from the reporting requirements of Parts 43, 45, and 46 for…

View the entire entry:
http://www.theswapreport.com/2013/04/articles/dodd-frank-reforms-1/breaking-cftc-offers-nonswap-dealers-some-relief-from-some-swap-reporting-requirements-the-who-what-when-where-why-of-cftc-letter-1310/index.html

STATE STREET PRESS RELEASE CFTC NO ACTION FOR SWAP COUNTERPARTIES 10/4/13


The CFTC plans to issue relief today for reporting requirements for swaps between two non-dealers, which would otherwise become effective tomorrow. As expected, they will differentiate between “financial entities” and “non-financial entities,” with non-financial entities getting more time. They also plan to make a distinction between asset classes with respect to relief for Part 43 and Part 45 reporting requirements. The latest we are hearing on specifics is below. Also pasted below is the definition of “financial entity.” We will keep you posted, but please let us know if you have questions.

Relief for Part 43 (real–time reporting requirements) & Part 45 (reporting and recordkeeping of swaps entered into on or after April 10 between two non-dealers)
Financial entities: rate & credit swaps, 4/10 (no delay); all other asset classes, 5/29
Non-financial entities: rate & credit swaps, 6/30; all other asset classes, 8/19
Relief for Part 46 (reporting of historical swaps (those entered into between July 21, 2010 and April 10, 2013, including transitory EFS trades at CME or ICE))
Financial entities: all asset classes, 9/30
Non-financial entities: all asset classes, 10/31

(C) Financial entity definition

(i) In general For the purposes of this paragraph, the term “financial entity” means—
(I) a swap dealer;
(II) a security-based swap dealer;
(III) a major swap participant;
(IV) a major security-based swap participant;
(V) a commodity pool;
(VI) a private fund as defined in section 80b–2 (a) of title 15;
(VII) an employee benefit plan as defined in paragraphs (3) and (32) of section 1002 of title 29;
(VIII) a person predominantly engaged in activities that are in the business of banking, or in activities that are financial in nature, as defined in section 1843 (k) of title 12.

Please let us know if you have questions.

Best,

Charley Cooper
Senior Managing Director
State Street Global Markets
Phone: 212-259-3172
Email: CCooper2@StateStreet.com

CFTC Provides No-Action Relief from SDR Requirements to Swap Counterparties that are not SD or MSP


CFTC’s Division of Market Oversight Provides No-Action Relief from Swap Data Reporting Requirements to Swap Counterparties that are not Swap Dealers or Major Swap Participants

Washington, DC – The Division of Market Oversight (DMO) of the Commodity Futures Trading Commission (CFTC) today announced the issuance of a no-action letter providing swap counterparties that are not swap dealers or major swap participants (“non-SD/MSP counterparties”), with certain relief from the reporting requirements of the CFTC’s swap data reporting rules, which are set forth at Parts 43, 45 and 46 of the CFTC’s regulations.

Swap dealers and major swap participants are already required to be in compliance with their reporting obligations under the swap data reporting rules. The rules establish a compliance date of April 10, 2013, for non-SD/MSP counterparties.

DMO’s no-action letter provides non-SD/MSP counterparties that are not “financial entities”, as defined in Section 2(h)(7)(C) of the Commodity Exchange Act (“non-financial swap counterparties”), with reporting relief under Parts 43 and 45: (i) for interest rate and credit swaps, until July 1, 2013, and (ii) for equity, foreign exchange and other commodity swaps, until August 19, 2013. In addition, the no-action letter provides non-financial swap counterparties with reporting relief under Part 46, for all swap asset classes, until October 31, 2013.

Consistent with the compliance schedule established in the swap data reporting rules, non-SD/MSP counterparties that are “financial entities”, as defined in Section 2(h)(7)(C) of the Commodity Exchange Act (“financial swap counterparties”), must be in compliance with their Part 43 and 45 reporting obligations with respect to interest rate and credit swaps on April 10, 2013. DMO’s no-action letter provides financial swap counterparties with reporting relief under Parts 43 and 45, with respect to equity, foreign exchange and other commodity swaps, until May 29, 2013. In addition, the no-action letter provides financial swap counterparties with reporting relief under Part 46, for all swap asset classes, until September 30, 2013.

As a condition of relying on any relief from Part 43 and 45 reporting obligations that is provided in DMO’s no-action letter, a non-SD/MSP counterparty must, within one month after the end of the applicable relief period, backload and report to a swap data repository all swap transaction data, for the applicable relief period, that the non-SD/MSP counterparty would have been required to report pursuant to Part 45 in the absence of the no-action relief.

Last Updated: April 9, 2013

Getting Ready for Dodd-Frank: A Checklist for Non-Swap Dealers and Non-Major Swap Participants (courtesy of The SWAP Report)


Checklist: Non-Swap Dealers / Non-MSPs
Getting Ready For Dodd-Frank

WHAT TO DO WHEN
Obtain your LEI / CICI by going to www.ciciutility.org and following applicable instructions By April 10, 2013                                                   
Report all swaps for which you are the reporting counterparty, as required by Parts 43, 45 and 46 of the CFTC Rules Beginning on April 10, 2013
Maintain all records required by Part 45 of the CFTC Rules

Note: We have assumed that you are already maintaining records required by Part 46 of the CFTC Rules with respect to any “historical swaps”.

By April 10, 2013
Adhere to ISDA August 2012 Dodd-Protocol information is available at

http://www2.isda.org/functional-areas/protocol-management/protocol/8 

Note: Adherence may require you to put additional written policies and procedures into place, so as to enable you to give certain representations

By May 1, 2013*

*Sooner is better

For a company that is any of the following:

A non-swap dealer bank or other financial entity; or

An investment manager advising affiliated funds or investment accounts 

Put documentation into place to trade swaps that will be subject to central clearing (e.g., specified CDX and iTraxx credit derivatives, as well standard interest rate derivatives that involve USD, EUR, GBP and JPY)

Note: Most likely “suite” of documents will consist of:

a) Futures customer agreement with futures commission merchant (FCM) and OTC Cleared Addendum ; and

c) OTC Cleared Derivatives Execution Agreement (if you intend to execute away from your FCM)

Also, there is an assumption that you are not an “active fund,” since your central clearing requirement would have gone into effect in March 2013.

By June 10, 2013

 

Adhere to ISDA Dodd-Frank Protocol 2.0 by going to

http://www2.isda.org/functional-areas/protocol-management/protocol/12 

 

 By July 1, 2013*

*Sooner is better

 

For all others , including, but not limited to, the following:

Energy company;

A “corporate” that uses derivatives for hedging and risk management; 

An ERISA pension plan;

An Investment manager advising unaffiliated or “third party” funds and investment accounts

Put documentation into place to trade swaps that will be subject to central clearing (e.g., specified CDX and iTraxx credit derivatives, as well standard interest rate derivatives that involve USD, EUR, GBP and JPY)

Note: Most likely “suite” of documents will consist of:

a) Futures customer agreement with futures commission merchant (FCM) and OTC Cleared Addendum ; and

c) OTC Cleared Derivatives Execution Agreement (if you intend to execute away from your FCM)

 By September 9, 2013
Take all steps required to claim the end-user exception to central clearing, if applicable to you

Note: If you are an SEC reporting company or your stock is publicly traded, then you may need to obtain approvals from your board of directors.

Also, on April 1st, the CFTC issued its final inter-affiliate clearing exception.  The timeline for this rule has not yet been established, as it is contingent upon publication of the final rule in the Federal Register.  However, you may be required to take actions, if you intend to rely upon that rule.  More information can be found at www.cftc.gov.

 By September 9, 2013

Please note that this message does not constitute legal advice and, in any event, may not be applicable to your particular situation.  Therefore, you should consult with legal counsel to determine whether: 1)  any of the enumerated items are applicable to you; or 2) if you need to take any additional actions not enumerated on the above list.

Key blog on SWAPIFYING THE FUTURES MARKET.


Key blog on SWAPIFYING THE FUTURES MARKET.
A MUST READ.

Europe, Asia banks join U.S. in swap dealer line-up (from Reuters)



* Firms will register as they hit $8 bln threshold
Asian and European banks registered as U.S. swap dealers this week, joining Wall Street rivals in complying with new rules that aim to shed light on the opaque $650 trillion derivatives market.

Deutsche Bank, Commerzbank, Societe Generale, BNP Paribas and Nomura were among those listed in the registry of the National Futures Association (NFA), a U.S. regulator.

But large energy traders such as Royal Dutch Shell, Valero and Chevron were conspicuously absent from the registry, a sign of how the market is dominated by investment banks, which largely serve speculators.

The registry marks the first line-up of swaps dealers active in the United States, even if the names of the domestic banks were roughly known through data from the Office of the Comptroller of the Currency (OCC), another regulator.

Registration is one of the first deadlines to be met in the Dodd-Frank rule-writing, which is done in large part by the Commodity Futures Trading Commission (CFTC), whose powers have been vastly expanded to include swaps oversight.

Bloomberg Rolls Out Derivatives Platform


While the Dodd-Frank Act regulations for over-the-counter (OTC) derivatives are not finalized yet, Bloomberg Fixed Income Trading Platform is introducing new functionality to help institutional investors get a step closer to compliance with the swap-execution facility (SEF)-style trading rules.

via Pocket http://www.wallstreetandtech.com/articles/231601948 December 30, 2012 at 06:50PM

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