On September 15, 2015, the CFTC announced proposed amendments to the definition of "material terms" under CFTC regulations relating to swap portfolio reconciliation.
CFTC regulations on swap portfolio reconciliation require swap dealers and major swap participants to reconcile swap terms with other SDs or MSPs daily, weekly, or quarterly, depending upon the size of the particular swap portfolio. These regulations also require SDs and MSPs to provide non-SD and non-MSP counterparties with regular opportunities for portfolio reconciliation.
Under the new proposal, the CFTC would amend the definition of "material terms" to specifically exclude certain data fields from the periodic reconciliation requirements. If the proposed amendment to the definition of "material terms" is adopted, the adopted rule would supersede similar no-action relief provided pursuant to CFTC Letter 13-31 issued on June 26, 2013.
In separate statements, CFTC Commissioner, J. Christopher Giancarlo, and CFTC Chairman, Timothy Massad, praised the proposal for eliminating unnecessary burdens in the swap portfolio reconciliation rules. In addition, Commissioner Giancarlo encouraged parties affected by the swap reconciliation rules to submit comments regarding the ongoing costs associated with the reconciliation of other data fields that may not be relevant to the ongoing rights and obligations of the parties to a swap.
The comment period ends 60 days after the proposal's publication in the Federal Register.
The CFTC proposed rule is available at: http://www.cftc.gov/ucm/groups/public/@newsroom/documents/file/federalregister091515.pdf.