The final rules for Swap Data Recordkeeping and Reporting Requirements (the “General Swap Data Rules”), generally applicable to swaps and with respect to certain on-going swap data reporting requirements applicable to outstanding swaps, were published in the Federal Register on January 13, 2012. For more information on the General Swap Data Rules, please refer to our client update memorandum “Swap Data Recordkeeping and Reporting Under CFTC Rule Part 45 and Real-Time Public Reporting Under CFTC Rule Part 43 for Swap Counterparties That Are Not Swap Dealers or Major Swap Participants.”

Supplementing the General Swap Data Rule, on June 12, 2012, the Commodity Futures Trading Commission (“CFTC”) published in the Federal Register the final rules (the “Final Rules”) regarding swap data recordkeeping and reporting requirements for certain swaps entered into before the compliance date of the General Swap Data Rules. The Final Rules published on June 12, 2012 will become effective on August 13, 2012.

The Final Rules cover two types of swaps:

  • Swaps entered into before, July 21, 2010, the date of the enactment of the Dodd-Frank Act (the “DFA Enactment Date”) and which are still outstanding as of that date (the “Pre-Enactment Swaps”), and
  • Swaps entered into on or after the DFA Enactment Date but before the compliance date of the General Swap Data Rules (“Transition Swaps,” and together with Pre-Enactment Swaps, the “Historical Swaps”).

There is a three-step, phase-in period for swap data reporting compliance. The compliance date of the Final Rules as applicable to a party to a swap depends on the status of such party and the type of swap it has entered into as described below.

  • Swap dealers and major swap participants must commence full compliance with the Final Rules for credit swaps and interest rate swaps on the later of July 16, 2012, or 60 days after publication in the Federal Register of the CFTC’s final rules defining the term “swap.” 
  • Swap dealers and major swap participants must commence full compliance with the Final Rules for equity swaps, foreign exchange swaps, and other commodity swaps on or before 90 days after the compliance date for credit swaps and interest rate swaps.
  • Parties who are neither swap dealer nor major swap participant must commence full compliance with the Final Rules for all swaps on or before 90 days after the compliance date applicable to swap dealers and major swap participants with respect to equity swaps, foreign exchange swaps and other commodity swaps.

Voluntary swap data reporting for Historical Swaps is also permitted prior to the applicable compliance date to alleviate possible issues for swap data repositories to receive large volume of data on a single day if all swap participants were to report swap data for Historical Swap on each relevant Compliance Date.

SWAP DATA RECORDKEEPING REQUIREMENTS

Recordkeeping and Retrieval for Historical Swaps in Existence on or After April 25, 2011

April 25, 2011 is used as a reference date because that was the date on which the CFTC published the notice of proposed rulemaking for the recordkeeping requirements of Historical Swaps. The Final Rules require each party to a Historical Swap in existence on or after April 25, 2011, to keep the following records regarding each such swap:

  • Minimum primary economic terms (the “Primary Economic Terms”) included in Appendix 1* of the Final Rules, which include the Legal Entity Identifier of the parties, swap dealer status, major swap participant status, contract type, date of the trade, start date, end date, price, underlying assets, notional amount and payment information;
  • Copies of confirmations, master agreements or credit support agreements (and all amendments) if the party was in possession of such documents on or after April 25, 2011; and
  • In addition to the above, for any Historical Swap that remains in existence on the compliance date applicable to such party, it must keep all records required to be kept under the General Swap Data Rules to the extent such records are created or available to a party on or after the applicable compliance date.

Swap dealers and major swap participants must keep such records in electronic form, or paper form if paper is the original and exclusive recording media as long as such paper records are retrievable and reportable as required by the Final Rules. A swap party that is not a swap dealer or major swap participant may keep such records in either electronic or paper form as long as such paper records are retrievable and reportable as required by the Final Rules.

Recordkeeping and Retrieval for Historical Swaps that Expired Before April 25, 2011

Each party to a Historical Swap that expired or was terminated before April 25, 2011 must keep the information and documents relating to the terms of the transaction that were in its possession on or after:

  • October 14, 2010, for Pre-Enactment Swaps that expired or was terminated before April 25, 2011; and
  • December 17, 2010, for Transition Swaps that expired or was terminated before April 25, 2011.

Such records must be retrievable by the party within five business days throughout the applicable retention period.

Record Retention and Retrieval

All documents and other records described above must be kept for the life of the swap, and for a period of at least five years from the final termination of the swap.

For Historical Swaps in existence on or after April 25, 2011, records must be kept in a form that is retrievable as follows:

  • if the party to a swap is a swap dealer or major swap participant, the records must be readily accessible via real time electronic access by such party throughout the life of the swap and shall be retrievable by such party or its affiliate within three business days through the remainder of the applicable recordkeeping period, or
  • if the party to a swap is neither a swap dealer nor a major swap participant, the records must be retrievable by such party within five business days through the applicable recordkeeping period.

For Historical Swaps that expired or were terminated prior to April 25, 2011, records must be kept in a form that is retrievable by the party to the swap within five business days throughout the applicable recordkeeping period.

Inspection of Swap Data Records

All such retained records must be open to inspection upon request by the CFTC, the U.S. Department of Justice, the Securities and Exchange Commission, or any representative of an authorized prudential regulator. Copies of all records shall be provided by the recordkeeping party at its own expense to any representative of the CFTC upon request.

SWAP DATA REPORTING REQUIREMENTS

Reporting for Historical Swaps in Existence on or After April 25, 2011

For Historical Swaps in existence on or after April 25, 2011, the reporting party must report electronically, on (or prior to) the applicable compliance date, to a swap data repository (or the CFTC if no swap data repository is available) the following:

  • All minimum Primary Economic Terms, including Legal Entity Identifier of the reporting party;
  • The internal party identifier or Legal Entity Identifier used by the reporting party to identify the non-reporting party; and
  • The internal transaction identifier used by the reporting party to identify the swap.

Reporting parties are required to comply with the swap continuation data reporting required under the General Swap Data Rules for uncleared Historical Swaps in existence on or after April 25, 2011, throughout the existence of such swaps, except that when the reporting party reports a change to a minimum Primary Economic Term, it is only required to report such change that is required to be reported for Historical Swaps. Swap continuation data reporting is not required for such Historical Swaps that have been cleared by a designated clearing organization.

Reporting for Historical Swaps Expired or Terminated Before April 25, 2011

The reporting party to a Historical Swap that expired or was terminated before April 25, 2011 must report to a swap data repository (or the CFTC if no swap data repository is available) information relating to the terms of the transaction in the reporting party’s possession on or after:

  • October 14, 2010, for Pre-Enactment Swaps that expired or was terminated before April 25, 2011; and
  • December 17, 2010, for Transition Swaps that expired or was terminated before April 25, 2011.

The information may be reported via any method selected by the reporting party.

Determination of Which Party Must Report

Determination of which party must report swap data concerning Historical Swaps proceeds as follows:

  • If only one party is a swap dealer, the swap dealer is the reporting party;
  • If neither party is a swap dealer, and only one party is a major swap participant, the major swap participant is the reporting party;
  • If both parties are not swap dealers or major swap participants, and only one party is a financial entity as defined in Section 2(h)(7)(C) of the Commodities Exchange Act, the financial entity is the reporting party;
  • If both parties are not swap dealers or major swap participants, and only one party is a U.S. person, the U.S. person is the reporting party; and
  • If the parties are categorized the same way, the parties must agree to select the reporting party.

Application for Unique Legal Entity Identifiers

By the applicable compliance date, each reporting party for a Historical Swap in existence on or after April 25, 2011 must obtain a Legal Entity Identifier as required by the General Swap Data Rules.

Within 180 days after the applicable compliance date, the non-reporting party for a Historical Swap in existence on or after April 25, 2011 must obtain a Legal Entity Identifier as required by the General Swap Data Rules and provide it to the reporting party for further reporting to the applicable swap data repository.

Reporting of Errors and Omissions

When a reporting party discovers an error or omission in previously reported data, it must correct such error or omission as soon as technologically practicable. However, if the Historical Swap is one that is subject to continuing swap data reporting requirement, then the reporting party can also correct the error or omission in its next daily report.

If a non-reporting party discovers an error or omission in previously reported data, it must promptly notify the reporting party so the reporting party can rectify such error or omission.

Please click here to view Appendices.