Division of

Market Oversight

U.S. COMMODITY FUTURES TRADING COMMISSION

Three Lafayette Centre

1155 21st Street, NW, Washington, DC 20581

Telephone: (202) 418-5260

Facsimile: (202) 418-5527

www,cftc,gov

November 18,2011

Temporary and Conditional Relief from the Requirements of §§ 20.3 and 20.4 of the

Commission's Regulations Regarding Large Swaps Trader Reporting for Physical Commodities

Pursuant to authority delegated under § 20.8(a)(5) of the Commission's regulations, the

Division of Market Oversight ("Division") of the Commodity Futures Trading Commission

("Commission") is making available temporary relief from the requirements of §§ 20.3 and 20.4

regarding large trader reporting of physical commodity swaps and swaptions ("swaps").

On July 22, 2011, the Commission published large trader reporting rules for physical

commodity swaps. 76 FR 43851. The rules are codified in new part 20 of the Commission's

regulations and became effective on September 20, 2011. Section 20.3 of the reporting rules

requires daily reports from clearing organizations. Section 20.4 of the reporting rules requires

daily reports from clearing members and swap dealers ("reporting entities"). Section 20.7

provides that unless otherwise instructed by the Commission, a clearing organization or repOliing

entity shall submit data records and any other information required by the reporting rules using

the format, coding structure, and electronic data transmission procedures approved in w.riting by

the Commission. Section 20.8(a)(4) delegates to the Director of the Division the authority for

determining the format, coding structure, and electronic data transmission procedures for part 20

reports.

Section 20.10 establishes a flexible implementation framework for reporting under part

20 of the Commission's regulations. More specifically, § 20.10(c) allows the Commission to
accept reports submitted pursuant to §§ 20.3 and 20.4 that differ in content, or are submitted in a

form and manner other than as prescribed, for six calendar months following the effective date of

pmi 20, provided that submitters are making a good faith attempt to comply with part 20. As

mentioned earlier, § 20.8(a)(5) delegates the authority to accept such repolis to the Director of

the Division. The Division's authority to issue relief under § 20.1 0 expires on March 20, 2012.

Division staff is actively engaged in ongoing compliance and implementation discussions

with clearing organizations, clearing members, potential swap dealers, and data service

providers, separately and through the International Swaps and Derivatives Association and the

Futures Industry Association. The Division believes that the pmiicipants in these discussions are

representative ofthe pmiies that will be subject to the repOliing rules.

The Division also believes that substantial progress has been made towards finalizing

reporting guidance and an XML-based reporting format and record layout, and facilitating the

ability of reporting parties to comply with such guidance and format requirements. The Division

intends to issue and publicly distribute in the coming days a guidebook for part 20 reports to

provide fOlmal reporting guidance. The guidebook will include a final XML-based reporting

format and record layout. The Division notes that an additional XML-based reporting format

and record layout for §§ 20.3 and 20.4 reports may be accepted prior to March 20,2012.

In order to facilitate the transition to fully compliant XML-based reporting under part 20,

and consistent with the authority delegated by § 20.8(a)(5), the Director of the Division has

determined to temporarily provide relief for less than fully compliant reporting under §§ 20.3

and 20.4 until March 20, 2012. Reliance on the relief is conditioned on the terms described

below. These terms are demonstrative of a reporting pmiy's good faith attempt to comply with

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the requirements of part 20. Reporting parties that can readily file fully compliant §§ 20.3 and

20.4 reports, as prescribed by the Division, cannot rely or continue to rely on the relief described

herein.

Beginning on November 21, 2011 for cleared swaps and January 20, 2012 for uncleared

swaps, good faith will be demonstrated through the filing of otherwise fully compliant reports in

an interim pipe-delimited text format in which the "I" character is placed between each data field,

or the filing of less than fully compliant reports in a pipe-delimited text or XML-based format, as

prescribed by the Division. Submitted reports may be prepared and submitted by clearing

organizations or data vendors on behalf of reporting entities. The primary responsibility for

compliant repOliing, however, remains with the reporting entities that use third-party·service

providers.

Any reporting patiy that intends to rely on the safe harbor for reporting must submit an email to the Division, as prescribed by the Division's forthcoming guidebook to part 20, no later

than 30 calendar days following initial reporting, describing with specificity: (1) ways in which

the submission is not compliant with the data field requirements of §§ 20.3 and 20.4, (2) the

arrangements that are being made for coming into compliance with such requirements, and (3)

the anticipated date of full compliance with the requirements of pati 20, including the submission

ofrepOlis in an XML-based format, as prescribed by the Division.

As a fuliher condition of this relief, clearing organizations for cleared swaps and

repOliing entities for cleared and uncleared swaps are required to provide open interest data for

positions as of each month-end during the entire relief period, beginning on September 30, 2011,

and ending on February 29, 2012; such data must be submitted no later than March 20, 2012.

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Submitted open interest data must be reported on a futures equivalent basis in terms of the

contracts listed in § 20.2 of the reporting rules. The open interest data, which shall be submitted

in the pipe-delimited text format prescribed by the Division, must allow the Commission to

readily identify and distinguish swaps by: (1) the identifier assigned by a clearing organization

for a cleared product; and (2) the commodity reference price position type indicator as described

by the Division in writing. Open interest attributable to uncleared swaps must also be separated

by the counterparty to such swaps and reported as prescribed. The Division reminds the public

that other applicable provisions of part 20, including the special call provision of § 20.5(b) and

the books and records requirements of § 20.6, became effective on September 20,2011.

The terms ofthis letter supersede the terms ofthe § 20.10(c) letter issued by the Division

on September 16, 2011. Guidance relating to certain clearing members that are defined as such

in § 20.1 solely because they are swap counterparties to exclusively-self cleared contracts as

described in § 15.00 ofthe Commission's regulations will be provided separately. The Division

intends to include all of the "as prescribed" form and manner instructions referenced above in a

forthcoming guidebook to part 20 reports prior to November 21, 2011. Nothing in this letter

alters the § 20.10(b) compliance date for potential swap dealers that are not clearing members.

The effective date for such entities is tied to the effective date of a final Commission regulation

further defining the term swap dealer.

Sincerely,

Richard A. Shilts

Director

Division of Market Oversight

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