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Legal Update

Interim Final Rule Regarding Reporting of Pre-enactment Swap Transactions Issued

7 October 2010
Mayer Brown Legal Update

As was required under Section 729 of the Dodd-Frank Act, the US Commodity Futures and Trading Commission (CFTC) has adopted an Interim Final Rule to add a new Part 44 to Chapter I of Title 17 of the Code of Federal Regulations. The new rule will require the reporting of all swap transactions entered into before July 21, 2010, whose terms had not expired as of that date (pre-enactment unexpired swaps). Reports are to be made to a registered swap data repository either within 60 days of an appropriate swap data repository becoming registered or by the compliance date to be established by the permanent reporting rules to be promulgated under Section 2(h)(5) of the Commodity and Exchange Act, whichever is earlier.

The Interim Final Rule provides that the following information is required to be retained in existing format, to the extent that, and in such form as, they presently exist:

  • Any information necessary to identify and value the transaction;
  • The date and time of execution of the transaction;
  • Information relevant to the price of the transaction;
  • Whether the transaction was accepted for clearing by any clearing agency or derivatives clearing organization;
  • Any modification(s) to the terms of the transaction; and
  • The final confirmation of the transaction.

The rule also provides for the reporting responsibility for pre-enactment unexpired swaps as follows:

  • Where only one counterparty to a swap transaction is a swap dealer or major swap participant, the swap dealer or major swap participant shall report the transaction.
  • Where one counterparty to a swap transaction is a swap dealer and the other counterparty is a major swap participant, the swap dealer shall report the transaction.
  • Where neither counterparty to the swap transaction is a swap dealer or a major swap participant, the counterparties shall select the counterparty that will report the transaction.

However, until further definition of related terms, including “swap,” “swap dealer” and major swap participant,” the actual effect and requirements of the Interim Final Rule will remain uncertain.

The CFTC has issued a press release and a Q&A related to the Interim Final Rule.

For more information about the Interim Final Rule or any other matter raised in this Legal Update, please contact at +1 312 701 7366.

Learn more about our Derivatives & Structured Products practice.

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