SEFs Receive a 12-Month Documentation Reprieve

Swap execution facility (SEF) operators are breathing a little easier as the Commodity Futures Trading Commission (CFTC) has given SEFs conditional relief from certain recordkeeping requirements relating to confirmations of uncleared swaps.

By Rob Daly(2147487629)
Swap execution facility (SEF) operators are breathing a little easier as the Commodity Futures Trading Commission (CFTC) has given SEFs conditional relief from certain recordkeeping requirements relating to confirmations of uncleared swaps.

The CFTC’s Regulation 37.6(b) states that a SEF is to provide each counterparty to a transaction entered into on or pursuant to the rules of the SEF with a written record of all terms of transactions, which supersedes any previous agreement and serves as the confirmation of the transaction.

Under the terms of the no-action letter issued by the CFTC’s Division of Market Oversight (DMO), which expires on 30 September, 2015, the DMO will not recommend enforcement if a SEF incorporates the terms of underlying previously negotiated agreements in the confirmation without copies of the underlying agreement first being submitted to the SEF. It also will not recommend enforcement if a SEF fails to obtain by the time of execution copies of the incorporated underlying agreements as required by parts 27 and 45 of the CFTC regulations.

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