Continuing a theme amidst the Commodity Futures Trading Commission (“CFTC”) staff letters in 2022, the sixth letter of 2022 reminded market participants to correct errors and give notice to the CFTC’s staff when errors in swap data are discovered and can’t be quickly corrected. Under 2020 CFTC revisions to 17 C.F.R. Parts 43 and 45, counterparties to swaps and derivatives clearing organizations (“DCOs”) must correct errors in data submitted to or displayed by a swap data repository as soon as possible and within seven business days, or notify CFTC staff within twelve hours of determining that an error won’t be corrected within seven business days and include a remediation plan for correcting the error. Those correction and notice requirements would have been in full force on May 25, 2022, if not for the third CFTC staff letter of 2022 from the Division of Data. In that no-action letter the Division of Data informed market participants that staff wouldn’t recommend enforcement actions for failures to comply with those correction and notice requirements before December 5, 2022.
While reiterating that no-action position, the CFTC’s Division of Data reminds us that reporting errors in swap data repository information and correcting those errors has been required by Part 45 since 2012. Division of Data staff also highlight market participants’ failure to report terminated swaps to swap data repositories, or correct swap data repositories’ records showing terminated swaps as open. These failures to record swap terminations can skew regulators’ perception of the derivatives markets. Wise reporting parties and swap data repositories will be cleaning up reported data now. They will also familiarize themselves with the Swap Data Error Correction Notification Form, available at (https://www.cftc.gov/LawRegulation/DoddFrankAct/Rulemakings/DF_17_Recordkeeping/index.htm), and begin sending those forms to swapserrornotification@cftc.gov when tenacious errors in reported data arise.
For more information, please see https://www.cftc.gov/LawRegulation/CFTCStaffLetters/letters.htm