The Commodity Futures Trading Commission (CFTC) requires that all parties to swaps and certain foreign exchange transactions, including foreign exchange forwards, swaps and options (Transactions), obtain a legal entity identifier (LEI) and comply with new recordkeeping and (in some cases) reporting requirements by April 10, 2013.1 LEIs will be used in connection with recordkeeping and reporting for Transactions.
The recordkeeping and reporting requirements will only apply where at least one of the parties is a U.S. entity.
Recordkeeping requirements will apply to each party to a Transaction, regardless of its status. Speaking broadly, recordkeeping for Transactions requires the systematic retention of all documents and communication concerning the Transaction. The documents and communications must be made available within five business days of a request from a regulator or the United States Department of Justice.
CFTC rules require that one party to each Transaction report data concerning the Transaction, and such data will be maintained in a swap data repository. The party required to report on Transactions will vary depending on the status of the two parties to the Transaction. For Transactions between a CFTC-registered swap dealer and a non-swap dealer, the swap dealer will be required to report and the non-swap dealer will not report.
Legal Entity Identifier/CICIs
The LEI will be known temporarily as a CFTC Interim Compliant Identifier (CICI), until the global LEI system becomes operational. Each legal entity must have its own CICI. Affiliated entities and funds with common ownership or related by the same operator must each obtain a CICI.
CICIs may be obtained through the CICI Utility Site. Each entity required to obtain a CICI should visit the CICI Utility Site to check whether the entity is already entered in the CICI database. If so, it should verify that the information for the entity is accurate and complete and make any necessary corrections to the information. If the entity is not already in the CICI database, it should complete a request for a CICI. More detailed instructions may be found on the CICI Utility Site and the CICI FAQ.
A fee of $200 is charged for each entity when the CICI is first verified or obtained. In addition, the information in the database must be recertified annually. The recertification fee is $100.
Timing for LEIs/CICIs
The deadline for obtaining a CICI is April 10, 2013. However, the CICI requirements will not apply to Transactions that expired or terminated prior to April 25, 2011. In addition, for Transactions entered into on or after April 25, 2011, but before April 10, 2013, CICIs will be needed by the earlier of (i) the time the Transaction is modified, terminated or assigned and (ii) October 7, 2013.