# CFTC Letter No. 15-25: The Division of Market Oversight is issuing a no-action letter that extends No-Action Letter 14-108 and continues to provide relief from (1) the requirement that a SEF obtain documents that are incorporated by referen..

> Federal · Agency guidance · Superseded

URL: https://www.frixlaw.com/law-library/statutes/CFTC_L15_25

## Section

- **Citation:** CFTC Letter No. 15-25
- **Heading:** The Division of Market Oversight is issuing a no-action letter that extends No-Action Letter 14-108 and continues to provide relief from (1) the requirement that a SEF obtain documents that are incorporated by referen..
- **Jurisdiction:** Federal
- **Kind:** Agency guidance
- **Status:** Superseded
- **Text as of:** August 14, 2026
- **Source:** Compiled text
- **Location:** CFTC Staff Letters (2008-present) / The Division of Market Oversight is issuing a no-action letter that extends No-Action Letter 14-108 and continues to provide relief from (1) the requirement that a SEF obtain documents that are incorporated by referen...

## Text

Summary: The Division of Market Oversight is issuing a no-action letter that extends No-Action Letter 14-108 and continues to provide relief from (1) the requirement that a SEF obtain documents that are incorporated by reference in confirmations issued under Commission Regulation 37.6(b) prior to issuing the confirmation, and (2) the requirement that a SEF maintain such documents as records. In addition, the division is providing relief from the requirement set forth in Commission Regulation 45.3(a) that SEFs report terms contained in the agreements that are confirmation data.

U.S. COMMODITY FUTURES TRADING COMMISSION
Three Lafayette Centre
1155 21st Street, NW, Washington, DC 20581
Telephone: (202) 418-5000
Facsimile: (202) 418-5521
www.cftc.gov

CFTC Letter 15-25
No-Action
April 22, 2015
Division of Market Oversight

Re: Extension of No-Action Relief for SEF Confirmation and Recordkeeping
Requirements under Commission Regulations 37.6(b), 37.1000, 37.1001, and 45.2, and
Additional Relief for Confirmation Data Reporting Requirements under Commission
Regulation 45.3(a)

Ladies and Gentlemen:

On August 14, 2014, the Division of Market Oversight (“Division”) issued CFTC No-
Action Letter 14-108 to provide relief for swap execution facilities (“SEFs”) from confirmation
and recordkeeping requirements set forth in Commission Regulations 37.6(b), 37.1000, 37.1001,
and 45.2. The no-action letter provided that the Division would not recommend enforcement
action against a SEF that, without first obtaining copies of the underlying previously-negotiated
agreements between the counterparties to a non-cleared transaction, incorporates such
agreements by reference in the trade confirmation required under Commission Regulation
37.6(b). The letter also provided that the Division would not recommend enforcement action if a
SEF failed to maintain a copy of the incorporated underlying agreements as required under
Commission Regulations 37.1000, 37.1001, and 45.2(a)
en the counterparties to a non-cleared transaction, incorporates such
agreements by reference in the trade confirmation required under Commission Regulation
37.6(b). The letter also provided that the Division would not recommend enforcement action if a
SEF failed to maintain a copy of the incorporated underlying agreements as required under
Commission Regulations 37.1000, 37.1001, and 45.2(a).

Relief Requested

Absent further action from the Division, No-Action Letter 14-108 will expire on
September 30, 2015. In its letter dated April 15, 2015,1 the Wholesale Markets Brokers’
Association, Americas (“WMBAA”)2 has requested that the relief granted in No-Action Letter
14-108 be extended until March 31, 2016 with the addition of relief from certain swap data
reporting requirements under Commission Regulation 45.3(a)(1). According to WMBAA, the
relief granted in No-Action Letter 14-108 has not eased the operational concerns that prompted
the original request for relief. Due to the complexity of the issue, WMBAA states that SEFs
have been unable to develop a method to request, accept and maintain a library of every
underlying previously-negotiated freestanding agreement between counterparties that is not
cumbersome and cost prohibitive. According to WMBAA, many of these agreements are
maintained in paper form, or scanned PDF files, making them impossible to quickly digitize in a

1 Letter from Wholesale Markets Brokers’ Association Americas, Request for Relief from Certain Requirements
under Parts 37 and 45 Related to Confirmations and Recordkeeping for Swaps Not Required or Intended to be
Cleared (April 15, 2015).
2 WMBAA is an independent industry body that represents BGC Derivatives Markets, L.P.; GFI Swaps Exchange
LLC; ICAP SEF (US) LLC; ICAP Global Derivatives LTD; tpSEF, Inc.; and Tradition SEF, Inc. Each of the
WMBAA member firms is temporarily registered with the Commission as a SEF.
Related to Confirmations and Recordkeeping for Swaps Not Required or Intended to be
Cleared (April 15, 2015).
2 WMBAA is an independent industry body that represents BGC Derivatives Markets, L.P.; GFI Swaps Exchange
LLC; ICAP SEF (US) LLC; ICAP Global Derivatives LTD; tpSEF, Inc.; and Tradition SEF, Inc. Each of the
WMBAA member firms is temporarily registered with the Commission as a SEF.

No-Action Relief for SEF Confirmation and Recordkeeping Requirements
Page 2

cost-effective manner. WMBAA states that the resource cost is considerable when considering
the number of different agreements that exist to accommodate the different parties and different
asset classes. WMBAA believes that SEFs will be unable to comply with Commission
regulations by September 30, 2015, and requests additional time until March 31, 2016, to
develop a solution.

In addition, WMBAA also requests relief from the requirement set forth in Commission
Regulation 45.3(a)(1) that SEFs report terms contained in the underlying previously-negotiated
freestanding agreements that are confirmation data.3 According to WMBAA, because SEFs do
not possess the agreements, SEFs are unable to report terms incorporated by reference from these
agreements. WMBAA requests relief from the reporting obligations until March 31, 2016 to
allow more time to devise a solution to the reporting issues.

Background

Commission Regulation 37.6(b) requires that a SEF “provide each counterparty to a
transaction that is entered into on or pursuant to the rules of the [SEF] with a written record of all
of the terms of the transaction which shall legally supersede any previous agreement and serve as
a confirmation of the transaction.”4 In the adopting release for the final part 37 rules, the
Commission expressed that, with respect to non-cleared swaps, SEFs could satisfy the
regulation’s written confirmation requirement by incorporating by reference terms set forth in
agreements previously negotiated by the counterparties, provided that su
ly supersede any previous agreement and serve as
a confirmation of the transaction.”4 In the adopting release for the final part 37 rules, the
Commission expressed that, with respect to non-cleared swaps, SEFs could satisfy the
regulation’s written confirmation requirement by incorporating by reference terms set forth in
agreements previously negotiated by the counterparties, provided that such agreements had been
submitted to the SEF ahead of execution.5

Commission regulations also require that a SEF maintain all agreements that are
incorporated by reference in a confirmation. Commission Regulations 37.1000 and 37.10016
implement the requirement set forth in SEF Core Principle 10 that a SEF maintain records of all
activities relating to the business of the facility, including a complete audit trail.7 Commission
Regulation 45.2(a) also requires that a SEF “keep full, complete, and systematic records,
together with all pertinent data and memoranda, of all activities relating to the business of such
entity or person with respect to swaps, as prescribed by the Commission.”8

3 “Confirmation data” is defined as “all of the terms of a swap matched and agreed upon by the counterparties in
confirming the swap.” 17 C.F.R. §45.1.
4 17 C.F.R. §37.6(b).
5 Core Principles and Other Requirements for Swap Execution Facilities, 78 Fed. Reg. 33,491 n.195 (June 4, 2013)
(the proviso furthers counterparties’ ability “to ensure that nothing in the confirmation terms contradict” the terms
contained in the incorporated agreements).
6 17 C.F.R. §§ 1000, 1001.
7 CEA section 5h(f)(10); 7 U.S.C. 7b–3(f)(10).
8 17 C.F.R. §45.2(a).
. §37.6(b).
5 Core Principles and Other Requirements for Swap Execution Facilities, 78 Fed. Reg. 33,491 n.195 (June 4, 2013)
(the proviso furthers counterparties’ ability “to ensure that nothing in the confirmation terms contradict” the terms
contained in the incorporated agreements).
6 17 C.F.R. §§ 1000, 1001.
7 CEA section 5h(f)(10); 7 U.S.C. 7b–3(f)(10).
8 17 C.F.R. §45.2(a).

No-Action Relief for SEF Confirmation and Recordkeeping Requirements
Page 3

Section 45.3 of the Commission’s regulations requires that registered entities and swap
counterparties report swap creation data to SDRs.9 For swaps executed on or pursuant to the
rules of a SEF or Designated Contract Market (“DCM”), Commission Regulation 45.3(a)(1)
requires the SEF or DCM to report all required swap creation data to an SDR as soon as
technologically practicable after execution of the swap.10 Swap creation data is comprised of all
primary economic terms (“PET”) data for a swap and all confirmation data for a swap.11 The
primary economic terms of a swap are “all the terms of a swap matched or affirmed by the
counterparties in verifying the swap” and include, at a minimum, the terms for swaps in each
asset class found in Appendix 1 to part 45.12 Confirmation data is “all of the terms of a swap
matched and agreed upon by the counterparties in confirming the swap.”13

No-Action Relief

Based on the representations in WMBAA’s request, the Division understands the
difficulty facing SEFs to develop a cost-effective method to request, accept and maintain a
library of every underlying previously-negotiated freestanding agreement between counterparties
by September 30, 2015.14 Accordingly, the Division has determined to extend the no-action
relief provided in No-Action Letter 14-108
ed on the representations in WMBAA’s request, the Division understands the
difficulty facing SEFs to develop a cost-effective method to request, accept and maintain a
library of every underlying previously-negotiated freestanding agreement between counterparties
by September 30, 2015.14 Accordingly, the Division has determined to extend the no-action
relief provided in No-Action Letter 14-108. During the extended period of relief, the Division
will not recommend that the Commission take enforcement action if, in a confirmation provided
pursuant to Commission Regulation 37.6(b), a SEF incorporates by reference terms from
previously-negotiated agreements between the counterparties, without first having been supplied
copies of such agreements. The Division also will not recommend that the Commission take
enforcement action against a SEF for failure to maintain a copy of the agreements incorporated
by reference in the SEF’s confirmation, as required under Commission Regulations 37.1000,
37.1001 and 45.2(a).

Additionally, based on the representations in WMBAA’s request, the Division
understands that SEFs are unable to report confirmation data contained solely in the terms of the
underlying agreements that are incorporated by reference in the SEF’s 37.6(b) confirmation
because the SEFs do not possess the agreements. Accordingly, the Division will not recommend
that the Commission take enforcement action against a SEF for failure to report such terms as
confirmation data pursuant to Commission Regulation 45.3(a). However, a SEF must continue
to report all terms the SEF is currently reporting pursuant to part 45 of the Commission’s

9 17 C.F.R. §45.3.
10 17 C.F.R. § 45.3(a)(1).
11 17 C.F.R. §45.1 (“Required swap creation data means all primary economic terms data for a swap in the swap
asset class in question, and all confirmation data for the swap.”).
12 Id. (definition of “primary economic terms”).
13 Id
F is currently reporting pursuant to part 45 of the Commission’s

9 17 C.F.R. §45.3.
10 17 C.F.R. § 45.3(a)(1).
11 17 C.F.R. §45.1 (“Required swap creation data means all primary economic terms data for a swap in the swap
asset class in question, and all confirmation data for the swap.”).
12 Id. (definition of “primary economic terms”).
13 Id. (definition of “confirmation data”).
14 These agreements may include, but are not limited to, the International Swaps and Derivatives Association Master
Agreement, the Schedule to the Master Agreement, and the Credit Support Annex to the Master Agreement.

No-Action Relief for SEF Confirmation and Recordkeeping Requirements
Page 4

regulations as of the time of the issuance of this letter, even if such terms are contained in the
incorporated agreements.

This relief applies only to non-cleared swap transactions executed on or pursuant to the rules
of a SEF and is subject to the following conditions:

1. The SEF must have a rule in its rulebook that requires a SEF confirmation to
state, where applicable, that it incorporates by reference the terms of the
underlying previously-negotiated freestanding agreements between the
counterparties.
2. The SEF must have a rule in its rulebook that states that in the event of any
inconsistency between a SEF confirmation and the underlying previously-
negotiated freestanding agreements, the terms of the SEF confirmation legally
supersede any contradictory terms; and the SEF must also have a rule that
requires the SEF’s confirmations to state the same.
3. The SEF must have a rule in its rulebook that requires its participants to provide
copies of the underlying previously-negotiated freestanding agreements to the
SEF on request.
4
usly-
negotiated freestanding agreements, the terms of the SEF confirmation legally
supersede any contradictory terms; and the SEF must also have a rule that
requires the SEF’s confirmations to state the same.
3. The SEF must have a rule in its rulebook that requires its participants to provide
copies of the underlying previously-negotiated freestanding agreements to the
SEF on request.
4. The SEF must have a rule in its rulebook that requires the SEF to request from
participants the underlying previously-negotiated freestanding agreements on
request from the Commission and requires the SEF to furnish such documents to
the Commission as soon as they are available.
5. A SEF must continue to report all PET data as is required under section 45.3(a)(1)
of the Commission’s regulations. For the purposes of this relief, the data that a
SEF must still report pursuant to section 45.3(a)(1) includes, at a minimum:
a. All PET data required to be reported pursuant to Commission Regulation
45. This includes the specific terms listed in the Tables of Minimum
Primary Economic Terms Data in Appendix 1 to Part 45 of the
Commission’s regulations, as applicable to the particular swap;
b. All swap data that is readily available to the SEF and collected by the SEF
currently in the regular course of facilitating the execution of transactions
on its facility, or in the regular course of accepting transactions that
counterparties execute off of the SEF facility pursuant to the rules of the
SEF;
c. All swap data the SEF currently reports to any SDR in the regular course
of reporting swaps pursuant to Commission regulations; and
d. All swap data the SEF includes in the confirmation it sends to swap
counterparties pursuant to section 37.6(b) of the Commission’s regulations
that is not incorporated by reference from the underlying previously-
negotiated freestanding agreements.
SEF;
c. All swap data the SEF currently reports to any SDR in the regular course
of reporting swaps pursuant to Commission regulations; and
d. All swap data the SEF includes in the confirmation it sends to swap
counterparties pursuant to section 37.6(b) of the Commission’s regulations
that is not incorporated by reference from the underlying previously-
negotiated freestanding agreements.

No-Action Relief for SEF Confirmation and Recordkeeping Requirements
Page 5

6. For purposes of this relief, as of the time of issuance of this letter, a SEF may not
modify its trading systems or protocols,15 its reporting to an SDR (including
reporting via a third-party service provider), nor its confirmation process pursuant
to Commission Regulation 37.6(b) in a way that reduces the amount of PET data
it reports. The Division notes that a SEF is free to increase the amount of PET
data it reports.

The relief shall expire at 11:59pm, Eastern Daylight Time, on March 31, 2016.

Market participants should be aware that the no-action positions taken herein do not
excuse affected persons from compliance with any other applicable requirements of the CEA or
the Commission’s regulations thereunder, in particular, the applicable swap data reporting
requirements and clearing requirements. This letter, and the no-action positions taken herein,
represent the views of the Division only, and do not necessarily represent the positions or views
of the Commission or of any other division or office of the Commission’s staff. As with all no-
action letters, the Division retains the authority to condition further, modify, suspend, terminate
or otherwise restrict the terms of the no-action relief provided herein, in its discretion
ken herein,
represent the views of the Division only, and do not necessarily represent the positions or views
of the Commission or of any other division or office of the Commission’s staff. As with all no-
action letters, the Division retains the authority to condition further, modify, suspend, terminate
or otherwise restrict the terms of the no-action relief provided herein, in its discretion.

If you have any questions concerning this correspondence, please contact Nancy
Markowitz, Deputy Director, Division of Market Oversight, at (202) 418-5453 or
nmarkowitz@cftc.gov; Dan Bucsa, Deputy Director, Division of Market Oversight, at (202) 418-
5435 or DBucsa@cftc.gov; Jonathan Lave, Associate Director, Division of Market Oversight, at
(202) 418-5983 or jlave@cftc.gov; or Ben DeMaria, Special Counsel, Division of Market
Oversight, at (202) 418-5988 or BDeMaria@cftc.gov.

Sincerely,

Vincent A. McGonagle

Director

Division of Market Oversight

15 The Division notes that changes to SEF trading protocols fall within the definition of “Rule” in section 40.1 of the
Commission’s regulations. See 17 C.F.R. § 40.1(i) (the definition of “Rule”). As a result, any changes to SEF
trading systems or protocols require a filing with the Commission pursuant to section 40.5 or 40.6 of the
Commission’s regulations. See 17 C.F.R. §§ 40.5 and 40.6.

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Source: Frix Law Library, https://www.frixlaw.com/law-library/statutes/CFTC_L15_25. Check the current official text before relying on it. Not legal advice.