United States: Swaps End-User Update: CFTC Ownership and Control Reporting Rules

Last Updated: October 25 2014
Article by John S. Servidio and Ryan D. Taylor

End-users that trade derivatives on designated contract markets (DCMs) or swap execution facilities (SEFs) should expect to receive requests for additional trader and account information from their futures commission merchants (FCMs) to address the Commodity Futures Trading Commission (CFTC) Ownership and Control Reporting (OCR) rules. The CFTC's OCR rules require FCMs, clearing members, foreign brokers and swap dealers (collectively, Reporting Entities) to obtain additional identification and market participant data on new and updated forms. Swap end-users and other market participants that fail to provide the CFTC with the appropriate forms and information may have their trading privileges suspended or be assessed a fine.


On Nov. 18, 2013, the CFTC published new OCR rules and related forms to enhance its identification of futures and swap market participants (the OCR Final Rule). The OCR Final Rule expands upon the CFTC's pre-existing position and transaction reporting requirements and is intended to improve the CFTC's market surveillance and large trader reporting program. The CFTC currently requires Reporting Entities to obtain Forms 102 and 40 from market participants. The old Form 102 provides the CFTC with information regarding special accounts, volume threshold accounts and consolidated accounts, and the old Form 40 collects reporting trader information. The OCR Final Rule creates an updated Form 102 (New Form 102) and an updated Form 40 (New Form 40), as well as an entirely new Form 71 (New Form 71). New Form 102 is now expanded and divided into three sections (New Form 102A, New Form 102B and New Form 102S). A summary of the new and updated forms is provided below:

  • New Form 102A is the updated position reporting form filed by Reporting Entities when an account becomes a "special account." A special account is an account that contains a "reportable position." A reportable position is an account with open contract positions at the close of the market on any business day greater than or equal to the CFTC's reporting level for the underlying commodity. A link to the CFTC's reporting level for each relevant commodity is available here.
  • New Form 102B is used by clearing members, certain DCMs and SEFs to report when an account reaches a "reportable trading volume" level. A reportable trading volume level is 50 or more contracts on a DCM or SEF with the same product identifier during a single trading day (regardless of whether such account maintains the position after the close of trading).
  • New Form 102S is an updated version of old Form 102 filed by Reporting Entities to facilitate electronic reporting for swap counterparties or customer consolidated accounts with reportable positions in paired swap and swaption markets.
  • New Form 40(40S) is an updated version of old Form 40 required for accounts with a reportable position on an exchange-traded market (or on paired swap and swaption markets). Form 40(40S) is filed by owners and controllers upon a special call by the CFTC. The CFTC may send a Form 40(40S) to owners and controllers identified on New Form 102A, New Form 102B and New Form 71 to collect additional trader and account information.
  • New Form 71 is used by the CFTC to request information on a "volume threshold account" held in an omnibus account in order to identify the ultimate owner of such account. A volume threshold account is an account that holds a reportable trading volume level. New Form 71 is filed by originators of an omnibus volume threshold account or an omnibus reportable sub-account upon a special call by the CFTC.

What End-Users Need to Do

An end-user may provide the trader and account information required under the OCR Final Rule by sending a spreadsheet with the data directly to each Reporting Entity that it trades with. Alternatively, many end-users prefer to submit the information electronically through the Futures Industry Association (FIA) Tech Portal. The FIA Tech Portal is a web-based application that may simplify the data entry and information submission process. The FIA Tech Portal, which includes the OCR Data Service, can file an end-user's New Form 40(40S) and New Form 71 electronically with the CFTC, enable an end-user's Reporting Entities to comply with the OCR Final Rule and automatically re-file a New Form 40(40S) and a New Form 102 whenever the end-user updates its information. There is no fee for clients to use the FIA Tech Portal or OCR Data Service. However, the deadline for clients to register for the FIA Tech's OCR Data Service is Oct. 31, 2014. End-users that don't register for FIA Tech's OCR Data Service before Oct. 31, 2014, may still send their information in spreadsheet form to their Reporting Entities before the applicable compliance deadline for the OCR Final Rule. Pursuant to the CFTC's July 23, 2014 No-Action Letter, the compliance deadlines for end-users and Reporting Entities under the OCR Final Rule are as follows:

  • Feb. 11, 2015 for New Form 102A and New Form 102S
  • Mar. 11, 2015 for New Form 102B
  • Feb. 11, 2016 for New Form 40(40S)

Additional Recordkeeping Obligations

End-users should also be aware that the OCR Final Rule imposes additional recordkeeping obligations on certain large traders. The OCR Final Rule applies additional recordkeeping obligations on four new categories of market participants, including:

  1. owners of volume threshold accounts reported on New Form 102B,
  2. controllers of volume threshold accounts reported on New Form 102B,
  3. owners of reportable sub-accounts reported on New Form 71, and
  4. controllers of reportable sub-accounts reported on New Form 71.

CFTC regulations require that every volume threshold account controller, person who owns a volume threshold account, reportable sub-account controller, person who owns a reportable sub-account, and trader who owns, holds or controls a reportable futures or option position shall:

  1. keep books and records showing all details concerning all positions and transactions in the commodity or swap, the cash commodity or swap, its products and byproducts, and all commercial activities that it hedges in the futures, option or swap contract in which it is reportable, and
  2. upon request, furnish to the CFTC any pertinent information concerning such positions, transactions or activities in a form acceptable to the CFTC.

The OCR Final Rule recordkeeping obligations are in addition to other recordkeeping requirements that may be applicable to end-users that trade listed derivatives on DCMs or SEFs or over-the-counter swaps under Dodd-Frank Act swap data recordkeeping requirements.

Given the complexity of the OCR Final Rule and related recordkeeping requirements applicable to end-users, please contact one of the authors or your regular McGuireWoods lawyer for further guidance.

Click here for the full text of the OCR Final Rule.

Click here for a link to the FIA Tech’s OCR Data Service Portal.

Click here for our Swaps End-User Update regarding recordkeeping requirements.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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