The Commodity Futures Trading Commission has proposed to amend part 32 of its regulations governing trade options to reduce the reporting requirements for counterparties that are not swap dealers or major swap participants (non-SD/MSP counterparties), including commercial end-users that enter into trade options in connection with their businesses. Under the proposal, non-SD/MSP counterparties would have no obligation to report trade options on CFTC Form TO. Instead, each non-SD/MSP counterparty would be required to notify the CFTC’s Division of Market Oversight by e-mail (1) within 30 days after entering into trade options having an aggregate notional value exceeding $1 billion during any calendar year or (2) when the non-SD/MSP counterparty reasonably expects to enter into trade options having an aggregate notional value exceeding $1 billion during any calendar year.
The proposal additionally clarifies that with respect to part 45 recordkeeping obligations, non-SD/MSP counterparties are only required to comply with CFTC Regulation 45.2. This would eliminate certain recordkeeping obligations related to unique swap identifiers in CFTC Regulation 45.5 and unique product identifiers in CFTC Regulation 45.7. However, each non-SD/MSP counterparty that entered into trade options with a swap dealer or major swap participant would be required to have a legal entity identifier (LEI) and submit its LEI to its counterparty as required under Rule 45.6.
The proposing release is available here.