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CFTC staff provided temporary no-action relief to swap dealers subject to the capital requirements of prudential regulators ("Bank SDs") from the CFTC's swap dealer financial reporting rules.
CFTC Letter 21-18, which was issued in response to a SIFMA and ISDA joint request, provides relief from certain financial reporting requirements under CFTC Rule 23.105(p)(2) ("Financial Report and Position Information") and information otherwise required to be submitted on CFTC Appendix C to Subpart E of Part 23.
The CFTC stated that it will not recommend enforcement action against a Bank SD for failing to comply with certain provisions of CFTC Rule 23.105(p)(2) for the following:
- Bank SDs That File Call Reports. Instead of Appendix C, the Bank SD files with the CFTC a Schedule RC-Balance Sheet and a Schedule RC-R-Regulatory Capital within the filing timeframe permitted by its prudential regulator for filing its call report.
- Non-U.S. Bank SDs That Do Not File Call Reports. Instead of Appendix C, such a swap dealer ("SD") files a statement of financial condition and statement of regulatory capital that (1) contain comparable financial information to the information in Appendix C and are filed with the SD's home country regulator and (2) include Schedule 1 of Appendix C when filed with the CFTC.
- Non-U.S. Bank SDs. Such an SD files a statement of financial condition, statement of regulatory capital and Schedule 1 in accordance with accounting standards permitted by its home country regulator, including accounting principles established in its home country jurisdiction, so long as the statements and Schedule 1 are submitted to the CFTC in English, with balances converted to USD.
- Non-U.S. Bank SDs. The statements and Schedule 1 are filed within 15 days of the earlier of the date such statements are filed with the SD's home country regulator or the date such statements are required to be filed with its home country regulator. The statements and Schedule 1 must be filed with the CFTC as of the end of each quarter, provided that semi-annual filings are permitted if the SD is required to file on that basis only with its home country regulator.
- Non-U.S. Bank SDs / Security-Based Swap Dealer ("SD/SBSD"). A dually registered SD/SBSD may file a FOCUS Report Part IIC or other SEC-approved financial reports in schedules in lieu of the requirements of CFTC Rule 23.105(p)(2), provided that such filings are made with the CFTC on the earlier of the date such statements are filed with the SEC or the date such statements are required to be filed with the SEC. Such reports must be filed in English, with balances converted to USD.
The relief in the letter will expire at the earlier of (i) the adoption of any modified Bank SD financial reporting and notification requirements or (ii) October 6, 2023.
Commentary
This relief will be significant to most non-U.S. bank swap dealers and comes with little time remaining until the compliance date (October 6, 2021) for Rule 23.105 ("Financial recordkeeping, reporting and notification requirements").
Primary Sources
- CFTC Letter 21-18: Time-Limited No-Action Position for Bank Swap Dealers from Certain Financial Reporting Requirements
- CFTC Press Release: CFTC Staff Provides Temporary No Action Relief from Certain Financial Reporting Requirements to Bank Swap Dealers
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