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CFTC exempts swap dealers, participants from disclosure of pre-trade mid-market mark

160px-US-CFTC-Seal.svgThe CFTC provided relief for swap market dealers and participants this week from requirements mandating the disclosure of pre-trade, mid-market mark to counterparties in certain swaps transactions.

In a no-action letter issued on Tuesday, the CFTC said that a “a swap dealer or major swap participant need not disclose the pre-trade mid-market mark for a Covered Derivative Transaction prior to the issuance of final Commission Regulations governing the registration of swap execution facilities, subject to any compliance implementation period contained therein, provided that: (1) real-time tradeable bid and offer prices for the [covered transaction] are available electronically, in the marketplace, to the counterparty; and (2) the counterparty to the [covered transaction] agrees in advance, in writing, that the swap dealer or major swap participant need not disclose a pre-trade mid-market mark.”

Current disclosure requirements mandate that a swap dealer or swap participant disclose the pre-trade mid-market mark of a swap to certain counterparties.

The letter added that a swap dealer or major swap participant does not need to disclose the pre-trade mid-market mark so long as real-time offer and bid prices for the transaction are available on a “designated contract market” or the counterparty agrees in advance, in writing, that the swap dealer or major swap participant does not need to disclose the mark.

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