CFTC publishes swaps definitions, compliance countdown begins

The Commodity Futures Trading Commission published its swap definitions in the Federal Register on Monday, which signals the beginning of the 90 day countdown for swaps dealers and major participants to come into compliance with registration requirements.

Dealers and buysiders, until Monday, have remained in compliance limbo, as the lack of final rules and definitions left them unable to anticipate future regulatory changes, Reuters reports.

“It’s nice to have a concrete date set on it,” Anna Pinedo, a partner at Morrison & Foerster, said regarding the October 12 registration deadline, according to Reuters.

The CFTC originally pinpointed October for several important compliance dates and end-of-year for some clearing requirements, though many were unsure whether the regulator could meet those goals.

The clearing mandate, a provision of the 2010 Dodd-Frank Act that is intended to improve safety in the $648 trillion over-the-counter derivatives market following the recent financial crisis, mandates that swaps formerly traded on an off-exchange to be traded through a clearinghouse under risk limits and new collateral requirements, Reuters reports.

Industry groups, including the International Swaps and Derivatives Association, are trying to ease the compliance burden. The ISDA, in conjunction with Markit, announced the publication of a system that will amend disclosures in swaps agreements to comply with the CFTC’s regulatory changes.

Another system, the Clearing Connectivity Standard developed by a committee of 12 dealer firms, includes a protocol for connecting swaps clearing systems to increase efficiency in transmitting swaps trading data.

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