CFTC Proposes Swap Data Exemption for Foreign Regulators from Dodd-Frank Indemnification and Confidentiality Provisions | Practical Law

CFTC Proposes Swap Data Exemption for Foreign Regulators from Dodd-Frank Indemnification and Confidentiality Provisions | Practical Law

The CFTC issued a proposed interpretive statement that would exempt foreign regulators from the Dodd-Frank Act's indemnification and confidentiality provisions when requesting certain data from swap data repositories (SDRs).

CFTC Proposes Swap Data Exemption for Foreign Regulators from Dodd-Frank Indemnification and Confidentiality Provisions

by PLC Finance
Published on 03 May 2012 • USA (National/Federal)
The CFTC issued a proposed interpretive statement that would exempt foreign regulators from the Dodd-Frank Act's indemnification and confidentiality provisions when requesting certain data from swap data repositories (SDRs).
On May 1, 2012, the CFTC issued a proposed interpretive statement that exempts certain foreign regulators from the Dodd-Frank Act's indemnification and confidentiality provisions in connection with requests for swap data from swap data repositories (SDRs) registered with the CFTC. The proposal would allow foreign regulators access to swap data held in SDRs, subject to certain conditions. The proposal reflects efforts to develop cooperation among international financial regulators and to address concerns raised by foreign regulators that the indemnification and confidentiality requirements have the potential to reduce transparency in swaps markets by encouraging foreign regulators to create separate and, in some cases, duplicative SDRs to avoid these requirements.
Commodity Exchange Act (CEA) Section 21(d), which was added to the CEA by the Dodd-Frank Act, requires that any regulator, including US regulators, seeking access to data held in an SDR registered with the CFTC as required by the Dodd-Frank Act must first agree in writing to:
  • Follow the CEA's confidentiality requirements.
  • Indemnify the SDR and the CFTC for any expenses stemming from litigation related to the data provided by the SDR.
Under the CFTC's proposal, the confidentiality and indemnification requirements of Section 21(d) would generally apply only to requests for data reported under CEA and CFTC regulations because some registered SDRs accept data reported under foreign regulations and those foreign regulators should be allowed access to that data in which they have an independent and sufficient regulatory interest without the burden of fulfilling the Section 21(d) requirements.
The CFTC's proposal would exempt foreign regulators from the confidentiality and indemnification requirements of Section 21(d) if:
  • The foreign regulator seeks data from an SDR that is also registered, recognized or authorized in the foreign jurisdiction's regulatory regime.
  • The data sought by the foreign regulator was reported to the SDR under the foreign jurisdiction's regulatory regime.
Therefore, foreign regulators are not exempt from the confidentiality and indemnification provisions when requesting data from an SDR that has been reported only under US regulations and not under the regulations in place in the foreign regulator's jurisdiction.
The CFTC is accepting public comment on the proposed guidance for 30 days after publication of the proposal in the Federal Register. For more on the proposal, see the CFTC's press release.
For more on the regulation of swaps and derivatives under the Dodd-Frank Act, see Practice Notes, Summary of the Dodd-Frank Act: Swaps and Derivatives and Road Map to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010: Swaps and Derivatives.