CFTC Announces Proposal to Amend the Definition of “Material Terms” for Purposes of Swap Portfolio Reconciliation

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On September 15, the CFTC issued a notice of proposed rulemaking that sets out an amendment of the regulatory definition of “material terms” for purposes of swap portfolio reconciliation under CFTC Regulation 23.502. Under this proposal, parties engaged in reconciling a swap portfolio will be permitted to exclude certain enumerated data fields from consideration in discharging their obligation to resolve discrepancies in “material terms” of swaps under CFTC Regulation 23.502(a)(4) and (b)(4).

The proposal, however, maintains the status quo of CFTC Regulation 23.502 in that swap dealers, major swap participants and their respective counterparties are required to exchange “the terms” of a swap under CFTC Regulation 23.500(i)(1) in the course of the reconciliation process.

If adopted, the proposed amendment would supersede CFTC Staff Letter 13-31, issued June 26, 2013, which has been providing similar relief.

More information is available here.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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