The CFTC Adopts Final Rules on the Recordkeeping
and Reporting of Historical Swaps
June 20, 2012
The U.S. Commodity Futures Trading Commission (the “CFTC”) has adopted final rules
governing the recordkeeping and reporting of historical swaps.1 Together with the swap data
recordkeeping and reporting rules previously published by the CFTC,2 these final rules create acomprehensive recordkeeping and reporting regime governing swaps and swap counterparties,
including end-users.
The historical swaps covered by these final rules encompass (i) swaps entered into before July21, 2010, the enactment date of the Dodd-Frank Wall Street Reform and Consumer Protection
Act (the “Dodd-Frank Act”) and still outstanding as of July 21, 2010 (“pre-enactment swaps”)
and (ii) swaps entered into on or after July 21, 2010, but prior to the compliance date set forth in
the CFTC’s final swap data recordkeeping and reporting rule3 (“transition swaps”). These final
rules override existing interim recordkeeping and reporting rules for historical swaps4 andestablish a two-tiered recordkeeping and reporting hierarchy, which imposes heightened
recordkeeping and reporting requirements on historical swaps that were in existence on or after
April 25, 2011, versus historical swaps that expired prior to April 25, 2011.5

A.

HISTORICAL SWAP DATA RECORDKEEPING

1.

Historical Swaps Expired Prior to April 25, 2011

New CFTC Regulation 46.2 imposes recordkeeping and retrievability requirements forhistorical swaps that expired or terminated prior to April 25, 2011. For pre-enactment swaps,
the final rule requires each counterparty to retain records “relating to the terms of thetransaction” that the counterparty possessed on or after October 14, 2010.6 For transition swaps,
the final rule requires each counterparty to retain records “relating to the terms of the
See Swap Data Recordkeeping and Reporting Requirements: Pre-Enactment and Transition Swaps, 77
F.R. 35200 (Jun. 12, 2012) (the “Adopting Release”).
2 See Swap Data Recordkeeping and Reporting Requirements, 77 F.R. 2136 (Jan. 13, 2012).
3 See Swap Data Recordkeeping and Reporting Requirements, 77 F.R. 2136 (Jan. 13, 2012); see also
Overview of Final Rules on Recordkeeping and Reporting of Swaps, available at
http://stblaw.com/siteContent.cfm?contentID=4&itemID=75&focusID=1374.
4 See Interim Final Rule for Reporting Pre-Enactment Swap Transactions, 75 F.R. 63080 (Oct. 14, 2010);
Reporting Certain Post-Enactment Swap Transactions, 75 F.R. 78892 (Dec. 17, 2010). A principal purpose
for both interim final rules was “to advise counterparties of the need to retain data . . . so that reporting
could be effectuated under permanent rules subsequently to be adopted.”
5 April 25, 2011 is the publication date of the proposed rulemaking for pre-enactment and transition
swaps. See Swap Data Recordkeeping and Reporting Requirements, 76 F.R. 22833 (Apr. 25, 2011).
6 October 14, 2010 is the publication date of the interim final rule for the reporting of pre-enactment
swaps. See 75 F.R. 63080 (Oct. 14, 2010).
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Memorandum – June 20, 2012transaction” that the counterparty possessed on or after December 17, 2010.7 Although the
CFTC did not provide interpretive guidance in the Adopting Release further defining thephrase “terms of the transaction”, in the interim final rules, the CFTC specified that suchinformation includes, but is not limited to: (i) information necessary to identify and value thetransaction; (ii) the date and time of execution of the transaction; (iii) the volume of thetransaction; (iv) information relevant to the price and payment of the transaction until the swap
is terminated, reaches maturity, or is novated; (v) whether the swap was accepted by aderivatives clearing organization (“DCO”) for clearing and, if so, the identity of the DCO; (vi)any modification(s) to the terms of the transaction; and (vii) the final confirmation of thetransaction.8 Because a principal purpose of the interim final rules was to advise counterpartiesof the need to retain records in anticipation of permanent rules, it may be prudent for parties tohistorical swaps to retain the above-listed records. To the extent, however, that a record was
not in a counterparty’s possession on or after October 14, 2010, for pre-enactment swaps, orDecember 17, 2010, for transition swaps, the final rules do not require the counterparty to create
or retain the record.
Under the final rule, all records must be retained throughout the life of the swap and for five
years thereafter. Although the records may be retained in any format, electronic or otherwise,
counterparties must be able to retrieve the records throughout the retention period within fivebusiness days. The table below summarizes the recordkeeping requirements for historicalswaps that expired prior to April 25, 2011.
Swap Data Recordkeeping for Historical Swaps that Expired Prior to April 25, 2011
Records to be Retained– Throughout the Life of the Swap andfor 5 Years Thereafter –Record Retrievability

Pre-Enactment
Swaps

Records “relating to the terms of thetransaction” possessed on or after
October 14, 2010

Within 5 business days
throughout the retention period

Transition Swaps

Records “relating to the terms of thetransaction” possessed on or after
December 17, 2010

Within 5 business days
throughout the retention period

December 17, 2010 is the publication date of the interim final rule for the reporting of transition swaps.
See 75 F.R. 78892 (Dec. 17, 2010).
8 See Interim Final Rule for Reporting Pre-Enactment Swap Transactions, 75 F.R. 63080, 63083 (Oct. 14,2010); Reporting Certain Post-Enactment Swap Transactions, 75 F.R. 78892, 78894 (Dec. 17, 2010).
“Volume” was excluded from the interim final rule for pre-enactment swaps.
7

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Memorandum – June 20, 2012

2.

Historical Swaps in Existence On or After April 25, 2011For historical swaps in existence on or after April 25, 2011, the recordkeeping requirements are
more extensive. CFTC Regulation 46.2 requires counterparties to these swaps to retain recordsof all the primary economic terms data (“PET Data”) designated by the CFTC for swaps in theparticular swap asset class. Under the final rule, the swap asset classes include: credit swaps,
equity swaps, foreign exchange swaps (other than cross-currency swaps), interest rate swaps(including cross-currency swaps), and other commodity swaps. In an appendix to the final rule,
the CFTC included tables of PET Data for each swap asset class. In addition to the records
relating to PET Data, the final rule also requires counterparties to retain any confirmation,
master agreement, or credit support agreement, including any modification or amendment
thereto, that was in the counterparty’s possession on or after April 25, 2011. Moreover,counterparties to historical swaps that have not expired by the applicable compliance date (seePart III below) must comply with the recordkeeping requirements in Part 45 of the CFTC’s
Regulations9 to the extent that any such records are created or become available to thecounterparty after that date. The table below summarizes the recordkeeping requirements forhistorical swaps that were in existence on or after April 25, 2011.
Swap Data Recordkeeping for Historical Swaps in Existence On or After April 25, 2011
Records to be Retained– Throughout the Life of the Swap and for 5 Years Thereafter –Records of all PET Data for the particular swap asset class;

Confirmations, Master Agreements, and Credit Support Agreements possessed on orafter April 25, 2011; andPart 45 Recordkeeping Requirements, if the swap extends beyond the compliance date.

Under the final rule, counterparties to historical swaps in existence on or after April 25, 2011
must retain records throughout the life of the swap and for a period of five years thereafter.
While any counterparty may maintain records in an electronic format, Swap Dealers (“SDs”)
and Major Swap Participants (“MSPs”) may only retain records in paper form if the record was
originally created and exclusively maintained in that format. For non-SD/MSP counterparties,
there is no corresponding restriction on paper records, so long as the information is retrievable
within the required timeframe. Throughout the life of the swap and for two years thereafter,
SDs and MSPs to historical swaps in existence on or after April 25, 2011 must have real timeelectronic access to the records that are required to be retained. For the remaining retention
period, SDs and MSPs must be able to retrieve these records within three business days. By
contrast, the final rules require non-SD/MSP counterparties to historical swaps in existence onor after April 25, 2011 to retrieve records within five business days throughout the retention
period. The table below summarizes the data format and retrievability requirements forhistorical swaps that were in existence on or after April 25, 2011.
9

See Swap Data Recordkeeping and Reporting Requirements, 77 F.R. 2136 (Jan. 13, 2012).

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Memorandum – June 20, 2012

Swap Data Recordkeeping for Historical Swaps In Existence On or After April 25, 2011
– Data Format & Retrievability –Record Format
Swap Dealers &Major Swap
Participants

Non-Swap Dealers &Non-Major Swap
Participants

B.

Record RetrievabilityElectronic Form; orPaper Form, only if
originally created andmaintained in paper
form

Readily accessible via realtime electronic access during
the life of the swap and for 2
years thereafterWithin 3 business days forthe remaining 3 years

Electronic Form; orPaper Form

Within 5 business days
throughout the retention
periodHISTORICAL SWAP DATA REPORTING

New CFTC Regulation 46.3 implements the statutory mandate pursuant to Section 723 of the
Dodd-Frank Act that each pre-enactment and transition swap be reported to a swap datarepository (“SDR”). Like the recordkeeping rules discussed above, the scope of the reporting
obligations for pre-enactment and transition swaps depends primarily on whether the swap
expired on or prior to April 25, 2011.
1.

Historical Swaps Expired Prior to April 25, 2011

For pre-enactment swaps that expired prior to April 25, 2011, the final rule requires thereporting counterparty to report “information relating to the terms of the transaction” that wasin the reporting counterparty’s possession on or after October 14, 2010, on the applicable
compliance date.10 For transition swaps that expired prior to April 25, 2011, the final rule
requires the reporting counterparty to report “information relating to the terms of thetransaction” that was in the reporting counterparty’s possession on or after December 17, 2010,
on the compliance date.11 Under the final rules, the information for historical swaps that
expired prior to April 25, 2011 may be reported via any method selected by the counterparty.
The CFTC noted in the Adopting Release that counterparties may satisfy this reporting
requirement by submitting images to an SDR or by entering confirmation data into a web
interface provided by the SDR.

To avoid a flood of data into SDRs on the compliance date, the final rule provides that the reporting
counterparty may elect to report data prior to the compliance date, so long as an SDR is prepared toaccept the report. See 17 C.F.R. § 46.3(c).
11 See id.
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Memorandum – June 20, 2012

Swap Data Reporting for Historical Swaps that Expired Prior to April 25, 2011
Data to be Reported

Date to be Reported

Pre-Enactment
Swaps

Information “relating to the terms of thetransaction” possessed on or after October 14,
2010 Compliance Date

Transition Swaps

Information “relating to the terms of thetransaction” possessed on or after December 17,
2010 Compliance Date

2.

Historical Swaps in Existence On or After April 25, 2011For historical swaps in existence on or after April 25, 2011, the final rules require an initial datareport on the applicable compliance date to an SDR of the relevant PET Data.12 In addition to
PET Data, the initial report must also include the legal entity identifier (“LEI”) of the reporting
counterparty,13 the internal counterparty identifier used by the reporting counterparty toidentify the non-reporting counterparty (or the LEI of the non-reporting counterparty), and theinternal transaction identifier used by the reporting counterparty to identify the swap.
In addition to the initial data report, the final rule also requires the reporting of swap
continuation data for uncleared historical swaps in existence on or after April 25, 2011. For theseswaps, the reporting counterparty must report swap continuation data in accordance with Part
45 of the CFTC’s Regulations.14 In broad terms, Part 45 requires the reporting of all changes to
PET Data as well as “valuation data” for each swap. Importantly, for historical swaps thereporting party is only required to report changes to the limited set of PET Data listed in theannex to Part 46, rather than the more extensive list of PET Data required by the annex to Part
45. For historical swaps in existence on or after April 25, 2011 that have been cleared, there is no
continuation data reporting requirement. A summary of swap data reporting for historicalswaps in existence on or after April 25, 2011 is below.

To avoid a flood of data into SDRs on the compliance date, the final rule provides that the reporting
counterparty may make the initial data report prior to the compliance date, if an SDR is prepared toaccept the report. See 17 C.F.R. § 46.3(c). Although the reporting counterparty may also reportcontinuation data at any time after the submission of the initial data report, the obligation to reportcontinuation data is not triggered until the applicable compliance date. Id.
13 To facilitate the tracking of swap transaction data, the new regulations also provide that each reporting
counterparty must obtain a legal entity identifier by the compliance date and non-reporting
counterparties to historical swaps in existence on or after April 25, 2011 must obtain a legal entity
identifier within 180 days after the compliance date. Importantly, unlike Part 45 of the CFTC’s
Regulations, unique swap identifiers and unique product identifiers are not required for historical swaps.
14 See Swap Data Recordkeeping and Reporting Requirements, 77 F.R. 2136 (Jan. 13, 2012); see also
Overview of Final Rules on Recordkeeping and Reporting of Swaps, available at
http://stblaw.com/siteContent.cfm?contentID=4&itemID=75&focusID=1374.
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Memorandum – June 20, 2012

Swap Data Reporting for Historical Swaps in Existence On or After April 25, 2011
Initial Data
Report for
Uncleared
Swaps and
Cleared Swaps

Data to be Reported

Date to be Reported

 PET Data designated by the CFTC for the swap
asset class, as possessed by the reporting
counterparty on or after April 25, 2011; Compliance Date LEI for the reporting counterparty;
 Internal Counterparty Identifier or LEI for thenon-reporting counterparty; and Internal Transaction Identifier for the swap.
 All swap continuation data required by Part 45,
including:Continuation
Data forUncleared
Swaps

Continuation
Data forCleared Swaps

3.

oAll changes to previously reported PET
Data; ando

Valuation Data No continuation data reporting required Depending on thereporting method,
as frequently as
daily—See Part 45

 Not applicable

Determining Reporting Obligations

To determine the reporting counterparty for historical swaps, the CFTC has issued thefollowing guidelines:
1. if only one party is an SD, the SD is the reporting party;
2. if neither party is an SD and one party is an MSP, the MSP is the reporting party;
3. if both parties are non-SDs/MSPs, but only one party is a financial entity,15 the financial
entity is the reporting party;
4. if both parties are non-SDs/MSPs, but only one party is a U.S. person, the U.S. person is
the reporting party; and5. if both parties fall within the same entity classification—e.g., both parties are nonSD/MSPs and neither party is a financial entity—the parties must agree which party willbe the reporting party.

In general, a “financial entity” includes: an SD/MSP, a security-based SD/MSP, a commodity pool, aprivate fund, an employee benefit plan, and any “person predominately engaged in activities that are in
the business of banking.” 7 U.S.C. § 2(h)(7)(C).

15

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Memorandum – June 20, 2012For historical swaps in existence on the compliance date, the determination of the reporting
counterparty is made by applying the guidelines above with respect to the current
counterparties to the swap as of the compliance date, regardless of whether either or both wereoriginal counterparties to the swap when it was first executed. For historical swaps that have
expired prior to the compliance date, the determination of the reporting counterparty is madeby applying the guidelines above to the counterparties to the swap as of its date of expiration or
termination, provided that a counterparty’s status as an SD or MSP will be determined as of thecompliance date.
In the event that a reporting counterparty ceases to be a counterparty to a historical swap due toan assignment or novation, the below guidelines will be applied to the remaining
counterparties:
1. if only one party is an SD, the SD is the reporting party;
2. if neither party is an SD and one party is an MSP, the MSP is the reporting party;
3. if both parties are non-SDs/MSPs, but only one party is a U.S. person, the U.S. person is
the reporting party; and4. in all other cases, the counterparty that replaced the previous reporting counterparty is
the reporting party, unless otherwise agreed by the counterparties.
To ensure the completeness and accuracy of data, all reports for a given swap must be made toa single SDR, which is the SDR that received the initial report of swap data. In the event that no
SDR accepts swap data for a particular asset class, reports for that swap asset class must be
made directly to the CFTC. If a reporting counterparty discovers an error or omission in datathat has previously been reported, it must notify the SDR or the CFTC, as appropriate, as soon
as technologically practicable. Likewise, non-reporting counterparties must “promptly” notify
reporting counterparties if they discover an error or omission in previously reported data.

C.

COMPLIANCE DATESFor the recordkeeping and reporting rule for historical swaps, the CFTC has provided forlimited compliance phasing by both asset class and counterparty type.
1. For SDs and MSPs, the compliance date for credit swaps and interest rate swaps will be
the later of: July 16, 2012 or 60 calendar days after the publication in the Federal Registerof the CFTC’s final rule defining the term “swap” (“Compliance Date 1”).
2. For SDs and MSPs, the compliance date for equity swaps, foreign exchange swaps, andother commodity swaps will be 90 calendar days after Compliance Date 1(“Compliance Date 2”).
3. For Non-SD/MSP counterparties, including end-users, full compliance will begin 90
calendar days after Compliance Date 2.

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Memorandum – June 20, 2012D.

CONCLUSION

The recordkeeping and reporting rules for historical swaps impose new regulatory burdens on
all historical swap counterparties. As a result, counterparties to historical swaps must begin toundertake a review of these regulations and the resulting impact on their compliance policies
and swap documentation. Among others considerations, historical swap counterparties would
be well-advised to consider:
1. an update to recordkeeping policies and record-retention procedures;
2. a review of technological capabilities with respect to record-retrieval and electronic datareporting; and3. amendments to existing ISDA documentation, including reporting party elections andentity representations.
***

For more information about any of the foregoing, please contact a member of the Firm’s
Derivatives Practice Group.
This memorandum is for general information purposes and should not be regarded as legal advice. Pleasecontact your relationship partner if we can be of assistance regarding these important developments. The
names and office locations of all of our partners, as well as our recent memoranda, can be obtained fromour website, www.simpsonthacher.com.
The contents of this publication are for informational purposes only. Neither this publication nor the lawyers who authored it are
rendering legal or other professional advice or opinions on specific facts or matters, nor does the distribution of this publication to
any person constitute the establishment of an attorney-client relationship. Simpson Thacher & Bartlett LLP assumes no liability inconnection with the use of this publication.

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Memorandum – June 20, 2012

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