On December 17-21, 2012, the CFTC's Division of Market Oversight (DMO) issued no-action letters granting temporary relief from:

On December 17, 2012, the DMO issued No-action Letter 12-55 providing temporary relief from a requirement to report valuation data for cleared swaps under the final SDR rules (codified in Section 45.4(b)(2)(ii) of the CFTC's Regulations). Under Regulation 45.4(b)(2)(i) and (ii), swap data valuations must be reported to the applicable swap data repository (SDR) by both the DCO that clears the swap and the reporting counterparty to the cleared swap, if the reporting counterparty is an SD or MSP (for information on which is the reporting counterparty to a swap, see Practice Note, US Derivatives Regulation: Practical Guide to Over-the-Counter (OTC) Swap Data Reporting: Box, Which Is the Reporting Party?).

In its request for relief, ISDA stated that in order to report data to an SDR, the reporting counterparty must have electronic data connections with the SDR. Although many potential SDs and MSPs have established connections with the DTCC's SDR, they do not have the requisite data connections with other organizations that either are or are willing to become SDRs. Therefore, ISDA requested relief from the requirement that SDs and MSPs (which are the only swap counterparties to which data reporting applies prior to April 10, 2013) report valuation data to an SDR. The DMO granted this relief to all market participants that:

This no-action relief extends these compliance deadlines to June 30, 2013 for valuation data reporting only. For details on all other swap data reporting compliance dates, see Practice Note, US Derivatives Regulation: Practical Guide to Over-the-Counter (OTC) Swap Data Reporting: Compliance Dates for Swap Data Reporting Rules.

For details on valuation data reporting under the final SDR rules see US Derivatives Regulation: Practical Guide to Over-the-Counter (OTC) Swap Data Reporting: CFTC Reporting Compliance: Continuation Data Under Parts 45 and 46.

On December 19, 2012, the DMO issued No-action Letter 12-59 providing temporary relief to market participants from reporting obligations under Part 45 of the CFTC's regulations (final SDR rules) relating to so-called "CDS clearing-related swaps." CDS clearing-related swaps are certain specialized "test" swaps that are entered into by clearing members of a DCO in accordance with the DCO's price submission process rules to determine end-of-day settlement prices for cleared CDS.

In order to ensure that the prices submitted by DCO clearing members as part of their CDS settlement price process are reliable and accurate, from time to time, DCOs require their clearing members to enter into "firm or forced trades" that result in cleared CDS positions. Requiring clearing members to enter into CDS clearing-related swaps encourages the best quality submissions and ensures that clearing members provide only actionable quotes for purposes of the CDS settlement price process. CDS clearing-related swaps are not executed on an exchange and are therefore referred to as "off-facility" swaps by the CFTC.

Under the no-action letter, the DMO granted relief from the data reporting obligations under Part 45 of the CFTC's regulations for CDS clearing-related swaps subject to the following conditions:

This no-action relief extends the compliance deadlines for data reporting for these swaps to June 30, 2013, but would be superseded if the CFTC adopts rules addressing the issue at an earlier date. For details on all other swap data reporting compliance dates, see Practice Note, US Derivatives Regulation: Practical Guide to Over-the-Counter (OTC) Swap Data Reporting: Compliance Dates for Swap Data Reporting Rules.

For information on the mechanics of swap clearing and the role of clearing members, see Practice Note, Mechanics of Derivatives Clearing.

On December 21, 2012, the DMO also issued No-action Letter 12-65 providing temporary relief to market participants from certain reporting requirements under Part 45 (final SDR rules) and Part 46 (historical swap data reporting requirements). This relief was granted in response to ISDA's assertions that in certain situations, reporting counterparties will be unable to obtain certain identifying information of non-reporting counterparties. The relief exempts reporting counterparties from reporting certain non-reporting counterparty information that may be unavailable to them at the time of reporting. The DMO therefore granted relief from the following reporting obligations:

In order to qualify for this relief:

This relief expires on the earlier of:

For more information on the rules discussed in this Update, see Practice Notes:

For information on other recent swap data reporting no-action relief from the CFTC, see Legal Updates: