A May 2022 deadline for compliance with amended swap data reporting requirements has been delayed six months by the Commodity Futures Trading Commission (CFTC) to allow market participants more time to comply.
The CFTC approved a rule in November 2020 that updated recordkeeping and reporting requirements for swap data repositories and other market participants like swap dealers (SDs) and major swap participants (MSPs). The policy change was one of several around that timeframe that sprung from a comprehensive review of swap reporting regulations that began in July 2017.
“The amendments, among other things, streamline the requirements for reporting new swaps, define and adopt swap data elements that harmonize with international technical guidance, and reduce reporting burdens for reporting counterparties that are neither SDs nor MSPs,” the November 2020 rule said. The rule took effect in January 2021.
Market participants were ordered to comply with the new rule by May 25, 2022. On Monday, the CFTC announced it extended the deadline to December 5, 2022.
In a no-action letter, the CFTC said “certain operational and technological issues” had been identified by market participants as hindrances to compliance by May 25.
As a result of the issues, “[M]arket participants have not begun the review, design, build, and testing phases needed to modify their swaps reporting systems,” the CFTC said.
“The [Division of Data] finds that the particular operational and technological issues caused by the timing of the Commission’s changes to the technical specification do not lend themselves to prompt resolution before the May 25, 2022, compliance date,” the letter read.
In a statement, Commissioner Dawn DeBerry Stump praised pushing back the compliance date.
“I believe the staff’s action is appropriate,” she said. “Market participants represent that they need this additional time to overcome certain operational and technological issues and to build and test changes to their swap data reporting systems.”
Market participants should not, however, take the delay as a sign the CFTC is not serious about enforcing the regulation, said Phil Flood, business development director for regulatory and STP services at Gresham Technologies, a vendor that helps firms overcome common data, reconciliation, connectivity, and reporting challenges.
“The no-action letter should not be used to push back the project because regulatory scrutiny has been eased,” Flood said. “Financial institutions will have nowhere to hide come December, and the CFTC will expect this grace period to allow firms to refine their updated submissions and reconciliations.”