Overview of Reporting and Recordkeeping

Title VII of the Dodd-Frank Act, along with the rules promulgated by the Commodity Futures Trading Commission (“CFTC” or “the Commission”), institute new swap data recordkeeping and reporting requirements for OTC derivatives that are regulated as “swaps.” End users will be subject to these requirements as of April 10, 2013.

Regulators will require swap counterparties to maintain records and require certain data to be reported to a swap data repository (“SDR”) within specific timeframes. SDRs will warehouse the swap data and permit regulators access to monitor market stability, identify abuses, and enforce new rules. Additionally, real-time reporting requirements will increase price transparency to all market participants by providing a subset of data to the public on an anonymous basis.

Part 45 Recordkeeping & Reporting

– The swap data recordkeeping requirements under Part 45 will affect all counterparties to a swap – as each party will be required to keep and maintain full and complete records for the life of the swap and for five years after termination and be able to retrieve the records within five business days.

– The swap data reporting requirement under Part 45 requires data to be submitted to the SDR both initially and throughout the life of a swap. Only one of the two counterparties to a swap is responsible for the reporting requirement. An end user may be responsible for the reporting requirement only if it faces another end user; the vast majority of swaps will be reported by swap dealers and major swap participants. In situations where an end user must report, it is permitted additional time to do so.

– Parties will be required to obtain legal entity identifiers and maintain identifiers for each of their swaps. Regulators designated DTCC and SWIFT to issue legal entity identifiers. On August 21, 2012, the CFTC Interim Compliant Identifiers (CICI) web portal was launched. Below are the steps to obtain a compliant entity identifier:

1. Go to: www.ciciutility.org

2. View the Frequently Asked Questions for additional detail: FAQs on ciciutility.org

3. To register, select “Create New Account” in the top right.

4. Complete the form to create an account.

5. Once final, the system will send you an email. You must verify the email address first before being able to proceed.

6. Follow the steps to obtain an entity identifier. Please note the following:

a. The charge is USD 200 for an entity identifier and the fee must be paid by credit card before the entity identifier will be issued.

b. The FAQs state the following information is required: “legal name, the registered address of the entity, entity status, and the entity’s legal form.”

c. The CICI Utility is run by DTCC and SWIFT and they provided the following email address for support: CustomerService@ciciutility.org.

Part 43 Real-Time Reporting

– Part 43 requires certain pricing and volume data for each “publicly reportable swap transaction” to be reported to an SDR as soon as technologically practicable. As in Part 45, end users will not be responsible for the real-time reporting of swaps in which they face SDs or MSPs. Swaps between two end users are granted additional time to report. Swaps that are not executed at arm’s length (e.g., such as those between two affiliates owned fully by the same parent company) are not subject to real-time reporting requirements, though they are subject to swap reporting under Part 45.

– Real-time reporting requirements will apply to foreign exchange derivatives, though FX forwards and FX swaps will not be subject to real-time reporting if the Department of the Treasury’s proposed and partial exemption of these products becomes final; FX forwards and FX swaps will, however, be subject to the Part 45 Recordkeeping and Reporting requirements.

Part 46 Swap Data Recordkeeping and Reporting Requirements: Pre-Enactment and Transition Swaps

– Part 46 requires recordkeeping and reporting for swaps that are deemed “pre-enactment” or “transition swaps”. As with the rules above, most end users will not be responsible for reporting requirements, so long as they transact only with “swap dealers” (“SDs”) and “major swap participants” (“MSPs”). Only end users that either transact with other end users or have affiliated entities that transact with one another will have to report data to swap data repositories (“SDRs”).

– The final rule states Pre-enactment swaps include “any swap entered into prior to enactment of the Dodd-Frank Act of 2010 (July 21, 2010), the terms of which have not expired as of the date of enactment of that Act.”

– Transition swaps are defined in the final rule to include “any swap entered into on or after the enactment of the Dodd-Frank Act of 2010 (July 21, 2010) and prior to the applicable compliance date on which a registered entity or swap counterparty subject to the jurisdiction of the Commission.”

Overview of Reporting and Recordkeeping