The Commodity Futures Trading Commission ("CFTC") has proposed swap reporting and recordkeeping amendments that would: designate a unique product identifier ("UPI") and product classification system ("PCS") for the "other commodity" asset class; implement related geographic masking to preserve anonymity; and update the list of swap data elements that must be reported.
Background
On December 12, 2023, the CFTC proposed amendments to its Part 43 and Part 45 swap reporting and recordkeeping regulations ("NPRM"). The NPRM has a 60-day comment period and a proposed compliance date of 365 days after Federal Register publication of final rules.
Principal Amendments
UPI and PCS Designation for Swaps in the "Other Commodity" Asset Class. In a February 2023 order, the CFTC designated a UPI and PCS for all swaps other than those in the "other commodity" asset class. The UPI must be used in all swap reporting and recordkeeping. Due to unique features of "other commodity" swaps that can allow counterparty identification using publicly reported swap transaction data, the CFTC is proposing a UPI and PCS for the "other commodity" asset class designed to ensure counterparty anonymity.
Geographic Masking. To mitigate counterparty identification risk, the CFTC proposed "geographic masking"—i.e., the use of a UPI for "other commodity" swaps that uses general, regional identifiers rather than specific geographic details. The NPRM would allow reporting entities to: (i) report a geographically-masked UPI to swap data repositories ("SDRs") for Part 43 purposes and (ii) provide a separate, non-geographically-masked UPI to SDRs for Part 45 purposes. The NPRM includes conforming changes to also protect counterparty anonymity.
UPI and PCS Designation Conditions. The CFTC also proposed an amendment permitting it to conditionally designate, limit, suspend, or withdraw a UPI and PCS. The CFTC mentioned adherence to international standards as a sample condition. The current regulations permit only unconditional designations. The amendment would apply to UPI and PCS designations for all swap categories.
Changes to Swap Data Elements. Lastly, the CFTC proposed 30 additional data elements in the Clearing, Counterparty, Notional Amounts and Quantities, Price, Product, and Transaction categories based on CDE Technical Guidance and the CFTC's experience. The new CDE fields are rooted in international harmonization efforts, and the NPRM includes modifications to existing data element descriptions to further international harmonization efforts. The new CFTC fields are intended to promote standardization and address data quality concerns. CFTC staff published proposed conforming technical specifications contemporaneously with the NPRM.
