SWAPS—CFTC issues advisory on Swap Data Errors and Related Error Correction Notification Form - 15 June 2022
The CFTC issued a staff advisory with instructions for notifying staff when a swap execution facility, designated contract market, or reporting counterparty determines that it is unable to timely correct an error.
The CFTC’s Division of Data (DOD) issued an advisory that provides instructions for notifying staff when a swap execution facility (SEF), designated contract market (DCM), or reporting counterparty determines that it is unable to timely correct a swap data error. In this advisory, CFTC staff also highlighted a specific type of error concerning swaps that remain erroneously open at swap data repositories (SDRs) despite having been terminated.
CFTC regulations 45.14(a) and 43.3(e) require SEFs, DCMs, and reporting counterparties to correct swap data errors as soon as technologically practicable following discovery and, in all cases, within seven business days following discovery. A SEF, DCM, or reporting counterparty must notify staff if it determines that it will not timely correct a swap data error. The advisory provides instructions for submitting error correction notifications. The advisory also appends a Swap Data Error Correction Notification Form that enumerates information sufficient to provide an initial assessment of the scope of the error and provides a SEF, DCM, or reporting counterparty an opportunity to present an initial remediation plan.
Additionally, in the advisory, CFTC staff highlights a specific swap data reporting error—swaps that erroneously appear in swap data repositories as open swaps, despite having been terminated—and notify market participants of the significant scope of this error; remind market participants of ongoing obligations to correct swap data errors; and clearly state the importance staff places on correcting these errors.
On January 31, 2022, DOD took a no-action position in CFTC Letter No. 22-03 with respect to certain reporting requirements, including the error correction notification. Upon the expiration of that no-action position on December 5, 2022, a SEF, DCM, or reporting counterparty will be required to notify CFTC staff if it will fail to timely correct a swap data error by submitting the Swap Data Error Correction Notification Form as noted in the advisory.
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