Effective Date: 03.124.23.2020 

303924732 v6

TW SEF LLC 

SWAP EXECUTION FACILITY

RULES
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enforce a Breakage Agreement with another Participant or Trading Customer, or require 

such an agreement as a condition to trading with such other Participant or Trading 

Customer on or pursuant to the Rules of the SEF in respect of a Cleared Swap. 

1005. Execution and Submission to Clearing of New Swap/Old Terms and New Swap/Corrected 

Terms 

(a) A New Swap/Old Terms or New Swap/Corrected Terms may be executed, exempt from 

the prohibitions in Rule 614(b), and submitted for clearing, only in accordance with the 

provisions of this Rule 1005. 

(b) Definitions. 

(i) DCO Rejected Swap. A “DCO Rejected Swap” means a Swap (other than a 

New Swap/Old Terms) intended to be cleared that is executed on or pursuant to 

the Rules of the SEF and is either: 

(A) rejected from clearing by the relevant DCO as a result of a clerical or 

operational error or omission made by the Company, a counterparty to 

the Cleared Swap or a Participant, Trading Customer or other agent 

acting on behalf of such counterparty, or 

(B) a component of a Package Transaction rejected from clearing by the 

relevant DCO because of the sequencing of the submission to the DCO 

of the components of the Package Transaction for clearing and not 

because the cleared components of the Package Transaction as a 

whole breached or would have breached a credit limit. 

(ii) Cleared Error Swap. A “Cleared Error Swap” means a Cleared Swap executed 

on the SEF with respect to which the counterparties identify an error after the 

Swap is accepted for clearing by the relevant DCO. 

(iii) New Swap/Old Terms. A “New Swap/Old Terms” means: 

(A) with respect to a DCO Rejected Swap, a swap executed on or pursuant 

to the Rules of the SEF and submitted for clearing in accordance with 

the provisions of Rule 1005(c), whose terms are identical, other than as 

to time of execution, to the terms of the related DCO Rejected Swap; 

(B) with respect to a Cleared Error Swap, a swap executed on or pursuant 

to the Rules of the SEF and submitted for clearing in accordance with 

the provisions of Rule 1005(d), for the purpose of offsetting and 

extinguishing the Cleared Error Swap, whose terms, other than time of 

execution, are identical to the terms of the related Cleared Error Swap, 

but on the opposite side of the market. 

(iv) New Swap/Corrected Terms. A “New Swap/Corrected Terms” means, with 

respect to a Cleared Error Swap, including a Cleared Error Swap that is a 

component Swap of a Package Transaction, a swap executed on or pursuant to 

the Rules of the SEF and submitted for clearing in accordance with the 

provisions of Rule 1005(d), whose terms, other than time of execution, reflect 

the terms to which the original counterparties or intended counterparties 

mutually assented when they executed the related Cleared Error Swap. 
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(c) New Swap/Old Terms following a DCO Rejected Swap. 

(i) A counterparty (or, if applicable, the Introducing Agent or Account Manager 

acting on behalf of a counterparty) to a DCO Rejected Swap may, either: (a) 

enter into an offsetting trade to correct the DCO Rejected Swap, as quickly as 

technologically practicable (but no later than one hour after the DCO Rejected 

Swap was rejected from clearing or (b) as quickly as technologically practicable 

after receipt from the Company of notice of the Cleared Swap’s rejection from 

clearing (but in any case no later than 30 minutes from the issuance of a notice 

of rejection by the relevant DCO to such Clearing Member), provide to the 

Company: 

(A) a description of the clerical or operational error or omission that caused 

the DCO Rejected Swap to be rejected from clearing or, in the case of a 

component Swap of a Package Transaction, a description of the 

clearing sequencing that caused the rejection of such component Swap 

from clearing; 

(B) the unique swap identifier (as that term is defined in CFTC Regulations) 

for the DCO Rejected Swap and any additional information reasonably 

requested by the Company; and 

(C) a representation that the swap qualifies as a DCO Rejected Swap, 

which, subject to Section 1005(c)(iii)(A), shall be accompanied by a 

request by both counterparties (or, if applicable, the Introducing Agent 

or Account Manager acting on behalf of any such counterparty) for 

submission by the Company to the relevant DCO of a New Swap/Old 

Terms, to correct such clerical or operational error or omission. 

(ii) Upon receipt of the information listed in Rule 1005(c)(i) above,Upon electing to 

enter into an offsetting trade, as described in Rule 1005(c)(i), a counterparty (or, 

if applicable, the Introductory Agent or Account Manager acting on behalf of a 

counterparty) must provide the Company: 

(A) the information requested in Rule 1005(c)(i)(A)-(B); 

(B) a representation that the Swap qualifies as a DCO Rejected Swap and 

that the DCO Rejected Swap contained clerical or operational errors; 

and 

(C) the material terms of the DCO Rejected Swap, offsetting trade and 

correct Swap 

(iii) Upon receipt of the information listed in Rule 1005(c)(ii), the Company shall 

promptly conduct an ex post facto review of the DCO Rejected Swap, the 

offsetting trade, and the correct Swap on a T+1 basis. The ex post facto review 

shall be consistent with the standards set forth in Rule 407(c) and the Company 

shall make an affirmative finding that an operational or clerical error occurred 

with respect to the DCO Rejected Swap. 

(ii)(iv) Upon receipt of the information listed in Rule 1005(c)(i), the Company shall 

promptly make an affirmative finding as to whether the original Swap qualifies 

as a DCO Rejected Swap consistent with the standards set forth in Rule 407(c). 

(iii)(v) Upon making an affirmative finding that the original Swap qualifies as a DCO 

Rejected Swap, and that the execution of a New Swap/Old Terms would be 
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consistent with the standards set forth in Rule 407(c), the Company will 

determine whether it is able to determine how to correct the error. 

(A) If the Company is able to determine how to correct the error, the 

Company may execute a New Swap/Old Terms, without obtaining the 

consent of the counterparties, and submit it to the relevant DCO for 

clearing, as soon as technologically practicable. 

(B) If the Company is not able to determine how to correct the error, it may 

seek guidance from the counterparites to the original Cleared Swap on 

how to address the error, and in such case, shall only submit a New 

Swap/Old Terms after obtaining consent from the counterparties. 

(C) In no event shall a New Swap/Old Terms be executed pursuant to this 

Rule 1005(c)(i) later than 60 minutes from the issuance of a notice of 

rejection by the relevant DCO to the relevant Clearing Members. 

(D) Execution of a New Swap/Old Terms must comply with the obligations 

set out in Rule 1003, including that any New Swap/Old Terms be 

screened against applicable Risk-Based Limits in accordance with Rule 

1003. 

(iv)(vi) Upon making an affirmative finding that the original Swap does not qualify as a 

DCO Rejected Swap, the Company shall provide notice of such determination to 

the counterparties to the DCO Rejected Swap. 

(v)(vii) If a New Swap/Old Terms is rejected from clearing by the relevant DCO, it shall 

be deemed void ab initio, and the Company will not provide the parties to such 

New Swap/Old Terms a second opportunity to enter into a New Swap/Old 

Terms. 

(d) New Swap/Old Terms and New Swap/Corrected Terms following a Cleared Error Swap. 

(i) A counterparty (or, if applicable, the Introducing Agent or Account Manager 

acting on behalf of a Trading Customer or Client Account) to a Cleared Error 

Swap may, as quickly as technologically practicable either: (a) enter into an 

offsetting trade to correct the Cleared Error Swap, as quickly as technologically 

practicable (but no later than 24 hours after the Cleared Error Swap was 

executed); provided that, the procedures described in Rule 1005(d)(ii) are 

followed or (b) as quickly as technologically practicable, after its determination 

of the existence of such Cleared Error (but in any case no later than 3 days after 

the Cleared Error Swap was executed), provide to the Company: 

(A) a description of the clerical or operational error or omission in the terms 

of the Cleared Error Swap; 

(B) the unique swap identifier (as that term is defined in CFTC Regulations) 

for the DCO Rejected Swap and any additional information reasonably 

requested by the Company; and 

(C) a representation that the Swap qualifies as a Cleared Error Swap, which 

shall be accompanied by a request by both counterparties (or, if 

applicable, the Introducing Agent or Account Manager acting on behalf 

of any such counterparty) for submission by the Company to the 

relevant DCO of a New Swap/Old Terms to offset and extinguish the 

Cleared Error Swap and, if the counterparties so elect, a New 
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Swap/Corrected Terms to correct such clerical or operational error or 

omission. 

(ii) Upon receipt of the information listed in Rule 1005(d)(i) above,Upon electing to 

enter into an offsetting trade, as described in Rule 1005(d)(i), a counterparty (or, 

if applicable, the Introducing Agent or Account Manager acting on behalf of a 

Trading Customer or Client Account) must provide the Company: 

(A) the information requested in Rule 1005(d)(i)(A)-(B); 

(B) a representation that the Swap qualifies as a Cleared Error Swap and 

that the Cleared Error Swap contained clerical or operational errors; and 

(C) the material terms of the Cleared Error Swap, offsetting trade and 

correct Swap. 

(iii) Upon receipt of the information listed in Rule 1005(d)(ii), the Company shall 

promptly conduct an ex post facto review of the Cleared Error Swap, the 

offsetting trade, and the correct Swap on a T+1 basis. The ex post facto review 

shall be consistent with the standards set forth in Rule 407(c) and the Company 

shall make an affirmative finding that an operational or clerical error occurred 

with respect to the Cleared Error Swap. 

(ii)(iv) Upon receipt of the information listed in Rule 1005(d)(i), the Company shall 

promptly make an affirmative finding as to whether the original Swap qualifies 

as a Cleared Error Swap and whether the execution of a New Swap/Old Terms 

and, if applicable, a New Swap/Corrected Terms would be consistent with the 

standards set forth in Rule 407(c). 

(iii)(v) Upon making an affirmative finding that the original Swap is a Cleared Error 

Swap, and that the execution of a New Swap/Old Terms and, if applicable, a 

New Swap/Corrected Terms would be consistent with the standards set forth in 

Rule 407(c), the Company will determine whether it is able to determine how to 

correct the error. 

(A) If the Company is able to determine how to correct the error, the 

Company may execute a New Swap/Old Terms and New 

Swap/Corrected Terms, as necessary, without obtaining the consent of 

the counterparties, and submit such Swaps to the relevant DCO for 

clearing, as soon as technologically practicable. 

(B) If the Company is not able to determine how to correct the error, it may 

seek guidance from the counterparites to the original Cleared Error 

Swap on how to address the error, and in such case, shall only submit a 

New Swap/Old Terms and, if applicable, a New Swap/Corrected Terms 

after obtaining consent from the counterparties. 

(C) In no event, shall a New Swap/Old Terms or a New Swaps/Corrected 

Terms be executed pursuant to this Rule 1005(d)(i) later than 3 days 

after the Cleared Error Swap was executed. 

(D) Execution of a New Swap/Old Terms or a New Swap/Corrected Terms 

must comply with the obligations set out in Rule 1003, including that any 

New Swap/Old Terms or New Swap/Corrected Terms be screened 

against applicable Risk-Based Limits in accordance with Rule 1003. 
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(iv)(vi) Upon making an affirmative finding that the original Swap does not qualify as a 

Cleared Error Swap, the Company shall provide notice of such determination to 

the counterparties to the Cleared Error Swap. 

(e) Upon execution of a New Swap/Old Terms or New Swap/Corrected Terms pursuant to 

Rule 1005(c)(i) or 1005(d)(i) the Company shall report to the SDR to which it reported 

data for the original DCO Rejected Swap(s) or Cleared Error Swap(s), as applicable, the 

swap transaction data for the New Swap/Old Terms and New Swap/Corrected Terms 

pursuant to Parts 43 and 45 of the CFTC’s Regulations, as well as the unique swap 

identifier (as that term is defined in CFTC Regulations) for the original DCO Rejected 

Swap(s) or Cleared Error Swap(s) and any termination, cancellation or other reporting 

event applicable to such swaps, as applicable. 

(f) A counterparty (or, if applicable, the Introducing Agent or Account Manager acting on 

behalf of a Trading Customer or Client Account) to a DCO Rejected Swap or Cleared 

Error Swap shall promptly provide any and all information that the Company determines 

is necessary to allow the Company to execute a New Swap/Old Terms or New 

Swap/Corrected Terms in respect of such DCO Rejected Swap or Cleared Error Swap, 

as applicable.