CFTC delays application of new swap reporting rules – now what?
On January 31st the Commodity Futures Trading Commission (CFTC) published a no-action letter for their amendments to part 43, 45 & 49, relating to the implementation of amendments to swap data reporting . The no action extends firms’ time to comply with the new rules from May 25, 2022 to December 5, 2022. While this may indicate that firms have some breathing room, the focus should remain on filling the implementation gaps that the industry was not able to complete in time.
Why is there a delay?
The delay comes as a result of a request for no action from ISDA and its members, centered around the timing of the CFTC’s publication of its final technology specifications in September 2021 and the finalized Swap Data Repository (SDR) rulebook. With such a short turnaround time from finalized specifications to the May 25, 2022 compliance, the industry felt the timeframes were too short to implement all the changes necessary.
From our experience, firms are encountering a number of issues as they prepare for the CFTC rewrite. For instance, adherence to the technical specification is currently a challenge for FpML submitters. Those who submit via csv have minimal changes to make, although some SDRs are deprecating templates that the industry has been using since reporting the go-live in 2012. The biggest challenge most firms are grappling with is how they will solve for their part 49 obligations to ensure data completeness and accuracy. As mentioned in our recently published white paper, there are open questions as to how firms develop not only the technology, but the operational model to support the process.
What’s next and how can Bloomberg help?
Though firms don’t have much time to adhere to the rewrite, there are vendors with out of the box solutions that can help facilitate their compliance with the requirements.
Throughout our engagement with the industry we have seen clients fall mostly into two buckets – the first are firms who have change fatigue and would like to insulate themselves from the rewrite and future changes like UPI and ISO 20022 (as noted in the no action, this is expected to go live sometime in Q4 2023). For those users, integrating to a reporting service like Bloomberg’s end-to-end reporting service, RHUB, will help create efficiencies and reduce risk. It will also enable increased data quality and control, as the application pre-validates submissions before sending to an SDR. Aside from the pre validation feature, RHUB also determines eligibility (including ISDA best practice), formats reports for trade reporting and provides a transparent user interface where clients can see the entire reporting lifecycle.
Secondly, we see firms looking to add independent controls into their existing technology stack. For those users a solution like Bloomberg Assurance will provide accuracy and completeness reporting capabilities. For the CFTC rewrite, clients can access Bloomberg’s Reportable/Reconcile offering to ensure completeness of reported data or utilize Validate, our rules engine for data accuracy.
I need to understand more!
Check out our white paper published in November. There we describe some history and challenges firms are facing in more detail. Want to talk to our North America reporting experts directly? Request a demo.