CFTC Establishes Swap Reporting Requirements

The US Commodity Futures Trading Commission (CFTC) has unanimously approved final rules regarding the accurate documentation and reporting of swap trades.

The regulator voted in the rules at 5-0, delivered in seriatim. They will require the timely and accurate confirmation, processing, netting, documentation and valuation of swaps, along with similar mandates for portfolio compression and reconciliation.

"Each of these requirements promotes crucial back office standards that will reduce risk and increase efficiency in the swaps market. These final rules are critical to the risk management of swap dealers and major swap participants and lowering their risk to the public," said CFTC chairman Gary Gensler in a statement of support. "The rules establish procedures to promote legal certainty by requiring timely confirmation of all swap transactions, setting forth documentation requirements for bilateral swap transactions, and requiring timely resolutions of valuation disputes. In addition, the rules enhance understanding of one counterparty's risk exposure to another, and promote sound risk management through regular reconciliation and compression of swap portfolios."

The rules will become effective 60 days after publication in the Federal Register.