CFTC Rule on Over the Counter Derivatives Took Effect Oct. 2

    Oct 09, 2013

    A new Commodity Futures Trading Commission (CFTC) rule requiring market participants to trade certain over the counter (OTC) derivatives at swap execution facilities (SEFs), rather than privately, took effect on Wednesday, October 2.  

    The Dodd-Frank Wall Street Reform and Consumer Protection Act established SEFs as regulated trading platforms dedicated solely to swaps. The purpose is to create transparency in the previously opaque and largely unregulated OTC derivatives market, which would provide greater liquidity and better price discovery to markets that can be more easily monitored and regulated for systemic risk.

    In addition to creating SEFs, the Dodd-Frank Act established a comprehensive regulatory framework for the execution of swaps. This framework contains records and information management requirements affecting swap dealers and major swap participants, including provisions governing daily trading records, business conduct standards, documentation standards, and data collection and reporting. 

    On January 13, 2012, the CFTC published finalized rules concerning the real-time public reporting of swap transaction data, as well as swap data recordkeeping and reporting content requirements under the Dodd-Frank Act. To view those rules, click here.

    The CFTC had received numerous requests to extend the rule’s effective date by a few months and allow the industry more time to prepare. A letter submitted to the CFTC by the Securities Industry and Financial Markets Association on Sept. 23, 2013, called for extending the deadline for registration and compliance with the final rules until at least April 1, 2014, to provide “sufficient time and guidance necessary to address key implementation challenges and interpretive questions … which may jeopardize liquidity in (and threaten the integrity of) the global derivatives market.”

    The Washington Policy Brief is an online advisory that contains brief summaries of recent legislative and regulatory issues that may affect the records and information management profession. Further information about the issue is accessed by clicking on the link provided at the end of each summary.


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