VIDEO: Recordkeeping Requirements Under Dodd-Frank

Pam Brown of Chatham Financial discusses how the recordkeeping requirements implemented by the U.S. Commodity Futures Trading Commission (CFTC) as a result of the Dodd-Frank Act affect end-users in the OTC derivatives market. In addition, she explains how clients use ChathamDirect to maintain compliance with this regulatory requirement.


What is it? A requirement to report and keep records of relevant data for all swap transactions. All swap counterparties – including end users – must keep records of their derivatives transactions. As for reporting, the CFTC requires that one of the two counterparties to a swap must report the data to a swap data repository (SDR).

Why is it required? Congress enacted the Dodd-Frank Act in response to the financial crisis of 2008 with the explicit goal of preventing a repeat of those events by making markets safer through greater transparency. Reporting and keeping records of swap data are fundamental to this aim.

Who does it apply to? All swap counterparties are required to keep records of their swaps. As for reporting, only one side has to report. The CFTC regulations on swap data reporting prescribes which party should be the reporting party:

  • – If only one party is a swap dealer (SD), then the SD is the reporting party.
  • – If only one party is a major swap participant (MSP), then the MSP is the reporting party.
  • – If both parties are the same classification (e.g., both are financial entities), then the parties must designate a reporting party.
  • – If a US person faces a foreign person that is not registered in the US as an SD or MSP, then the US person is the reporting party.

How can I comply? If your counterparty is responsible to report for your trade/s, you will need to provide them with necessary information they request. This information includes a Legal Entity Identifier for each party. This is something your counterparty cannot procure on your behalf, so you will need to make sure to obtain one before trading. For more information on LEI’s.

If you are required to report, you will need to submit swap data to a swap data repository, either directly on your own or through a third party vendor like Chatham.

How can Chatham help? Chatham has reported over 25,000 trades, both in the US and in Europe. For more information about our swap data reporting service, please contact your Chatham advisor.

Video Transcript:
Pam Brown: You can think of swap data reporting in two parts. There’s a real-time public reporting component and then there’s a swap data reporting component. In terms of the real-time public reporting this is information that is provided to a swap data repository which they then make public. So the information is only a subset of what’s considered swap data and there’s no identifying information involved.

In terms of the other pieces of data that is the data that is provided to the regulators for monitoring and regulatory purposes. Most end-users do not have to worry about swap data reporting, and that’s because in most cases they’re facing swap dealers, and the swap dealers in those cases will be responsible for reporting those trades. But all end-users do have to be worried about record keeping. Record keeping and reporting go hand in hand. They try to enhance transparency in the OTC derivatives market and allow for effective oversight by the regulators.

Now with the swap data record keeping requirement end-users must keep their records for the duration of the life of the trade as well as five years after its maturity or termination. The records can be kept in either paper format or electronic and they must be retrievable within five business days. Now the data itself should be full and complete and should include all of the data that’s related to the swap, including any confirmations.

Chatham’s system has been keeping records of swap transactions since way before there was a record keeping requirement, and our clients can use us as their record keeping system. They can provide us with the confirmations or any other sort of swap-related documentation and we’ll make that available on our web portal, ChathamDirect. The record keeping requirement has not been the main focus for a lot of the market participants. I think a lot of the complexities around central clearing and reporting, I think those have been much bigger headaches for the market.