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U.S. COMMODITY FUTURES TRADING COMMISSION

Three Lafayette Centre

1155 21st Street, NW, Washington, DC 20581

Telephone: (202) 418-5977

Facsimile: (202) 418-5407

gbarnett@cftc.gov

Division of Swap Dealer and

Intermediary Oversight

Gary Barnett

Director

CFTC Letter No. 13-06

No-Action

March 30, 2013

Division of Swap Dealer and Intermediary Oversight

Melissa MacGregor

Managing Director and Associate General Counsel

SIFMA

1101 New York Avenue, 8th Floor

Washington, D.C. 20005-4269

Re: Request for No-Action Relief for Swap Dealers and Major Swap Participants from 

Compliance with Certain Internal Business Conduct Requirements Found in

Subpart F to Part 23 of the CFTC’s Regulations

Dear Ms. MacGregor:

This letter is in response to your request dated February 28, 2013, to the Division of 

Swap Dealer and Intermediary Oversight (the “Division”) of the Commodity Futures Trading 

Commission (the “Commission”) on behalf of the Securities Industry and Financial Markets 

Association’s (“SIFMA”) member firms and other swap dealers (“SDs”) and major swap 

participants (“MSPs”) (collectively, the “Firms”), in which you request no-action relief from 

certain recordkeeping requirements of subpart F to part 23 of the Commission’s Regulations and 

Regulation 1.31 (the “Recordkeeping Regulations”).

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 In the letter, you provide rationales similar 

to those in your letter to the Division dated August 10, 2012 for why the Division should grant 

such relief from the Recordkeeping Regulations. In response to your August 2012 letter, the 

Division issued CFTC Letter No. 12-29, which granted no-action relief to SDs and MSPs from

 

1

For the relevant text of the Recordkeeping Regulations in part 23 of Title 17, see Swap Dealer and Major Swap 

Participant Recordkeeping, Reporting and Duties Rules; Futures Commission Merchant and Introducing Broker 

Conflicts of Interest Rules; and Chief Compliance Officer Rules for Swap Dealers, Major Swap Participants, and 

Futures Commission Merchants, 77 Fed. Reg. 20128 (Apr. 3, 2012). See also Regulation 1.31, 17 C.F.R § 1.31. 

SIFMA’s August 2012 letter did not request relief from Regulation 1.31, which is the Commission’s general 

recordkeeping rule, or CFTC Regulation 23.202(a)(3)(ii), which requires each Firm to keep a record of the date and 

time, to the nearest minute, using Coordinated Universal Time (“UTC”), by timestamp or other timing device, of all 

swap confirmations.
SIFMA

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CFTC Regulations 23.201(a)(1), 23.202(a), (a)(1) and (b), 23.202(a)(1)(ii) and (a)(2)(iv), and 

23.202(b)(3) and (b)(4), until March 31, 2013.2

The Commission promulgated subpart F to part 23 pursuant to sections 4s(f), 4s(g) and 

4s(h) of the Commodity Exchange Act (the “Act”), 7 U.S.C. § 1 et seq., as amended by section 

731 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank 

Act”), Pub. L. 111–203, 124 Stat. 1376 (2010). Subpart F to part 23 imposes several 

requirements on SDs and MSPs, including the following:

 Regulation 23.201 sets forth the records of swaps activities that SDs and MSPs must 

maintain. Such records include full and complete swap transaction information. 

Moreover, Regulation 23.201(a) requires daily trading records for each swap to be 

kept in a manner that is readily accessible, identifiable and searchable by transaction 

and by counterparty;

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 Regulation 23.202 sets forth daily trading record requirements for swaps and related 

cash and forward transactions. Such records include trade information related to preexecution, execution, and post-execution swap data and any related cash or forward 

transactions. Specifically, Regulations 23.202(a)(1) and (b)(1) require each SD and 

MSP to make and keep pre-execution trade information, including records of all oral 

and written communications provided or received concerning quotes, solicitations, 

bids, instructions, trading and prices, that lead to the execution of a swap (or lead to 

the conclusion of a related cash or forward transaction), whether communicated by 

telephone, voicemail, facsimile, instant messaging, chat rooms, electronic mail, 

mobile device or other digital or electronic media. Furthermore, 

Regulations 23.202(a) and (b) require SDs and MSPs to use Coordinated Universal 

Time (“UTC”) to timestamp a swap’s pre-execution, execution, and post-execution 

trade information, and any related cash and forward transactions;

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 Regulation 23.203 sets forth record retention and inspection requirements for SDs and 

MSPs. Pursuant to Regulation 23.203(a)(1), SDs and MSPs must keep all records 

required by the Act and Regulations at the principal place of business (or other 

designated principal office) of the SD or MSP.

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Regulation 1.31 is the Commission’s general recordkeeping rule and pertains to “all 

books and records required to be kept by the Act or by [CFTC] regulations.”

On behalf of the Firms, you have requested the following relief –

 

2

 See Division No-Action Letter No. 12-29, “Request for No-Action Relief for Swap Dealers and Major Swap 

Participants from Compliance with Certain Internal Business Conduct Requirements Found in Subpart F to Part 23 

of the CFTC’s Regulations” dated October 26, 2012, available at 

http://www.cftc.gov/ucm/groups/public/@lrlettergeneral/documents/letter/12-29.pdf. 

3 Regulation 23.201, 17 C.F.R. § 23.201; 77 Fed. Reg. at 20202-03. 

4 Regulation 23.202, 17 C.F.R. § 23.202; 77 Fed. Reg. at 20203-04.

5 Regulation 23.203, 17 C.F.R. § 23.203; 77 Fed. Reg. at 20204.
SIFMA

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a. Required Telephonic Recording of Pre-Execution Trade Information 

From Regulation 23.202(a), you are seeking relief until December 21, 2013 from the 

requirement that Firms record:

 Landline telephone conversations of substantially all relevant personnel involved in 

swaps and/or related cash or forward transactions located outside the United States 

involved in swaps activity; and

 Mobile telephone conversations of substantially all relevant personnel involved in 

swaps and/or related cash or forward transactions, whether located within or outside 

of the United States. 

In addition, you have represented, in subsequent meetings with Division staff, that for 

landline telephone conversations in offices located in the following jurisdictions outside the 

United States, the Firms are able to comply with the recording requirements set forth in 

Regulation 23.202(a): United Kingdom, Japan, Singapore, Hong Kong, and Australia.

b. Requirement to Maintain All Transaction Records in a Manner “Identifiable and 

Searchable” by Transaction and Counterparty

From Regulations 23.201(a)(1), 23.202(a) and 23.202(b), you seek no-action relief 

regarding compliance with the requirement that SDs and MSPs create and maintain transaction 

records (including daily trading records) in a manner identifiable and searchable by transaction 

and counterparty. Alternatively, you request that the Division clarify through interpretive 

guidance that Firms may satisfy this requirement by relying upon existing search capabilities in 

the relevant systems as well as an element of manual searching after the record has been created 

to achieve compliance with the relevant regulations.

c. Required Use of UTC Timestamp when Recording Quotations Prior To and At the 

Time of Execution of a Swap

From Regulations 23.202(a)(1)(ii) and (a)(2)(iv) (applicable to swaps), 23.202(b)(3) and 

(b)(4) (applicable to related cash or forward transactions), and 23.202(a)(3)(ii), you seek relief

for Firms to convert all legacy systems that record quotation, execution or confirmation times in 

local time into UTC. You request relief until such time as such Firm is reasonably able to modify 

such systems to provide the capability to record time data in UTC. Moreover, you represent that 

during the interim time, each Firm would enable any time data recorded in local time by a 

Legacy System to be convertible to UTC within a reasonable time after a regulatory request for 

such time data. Furthermore, you represent that the Firms are committed to using UTC as the 

time recording standards in newly installed or upgraded systems. 

d. Mandatory Retention of Required Records at a Principal Place of Business
SIFMA

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From Regulation 23.203(a)(1), you request no-action relief from (a) the requirement of 

the Firms to maintain all records required pursuant to CFTC Regulation 23.203 at the principal 

place of business of the Firm or such other principal office as shall be designated by the Firm,

until a reasonable time after further interpretive guidance has been provided by the CFTC and/or 

(b) CFTC Regulation 1.31, until the later of (i) December 21, 2013 and (ii) the applicable 

compliance date of any forthcoming rulemaking amending CFTC Regulation 1.31.6

Conclusion

Based upon the representations made in your correspondence, the Division believes that 

granting SDs and MSPs relief from some of the requirements specified above for a limited 

period of time is warranted to address the issues presented. Accordingly, the Division will not 

recommend that the Commission take an enforcement action against any Firm for failure to be 

fully compliant with the following requirements, prior to June 30, 2013, subject to the 

conditions and parameters set forth below:

(i) For landline telephones that are not located in one of the following geographic 

jurisdictions: United States, United Kingdom, Singapore, Hong Kong, Japan, Australia, 

Switzerland, and Canada, the requirement that SDs and MSPs make and keep records of all oral

communications related to pre-execution swap trade information (and communications that lead

to the conclusion of a related cash or forward transaction) pursuant to Regulations 23.202(a) and 

(b);

(ii) the requirement that SDs and MSPs maintain all transaction records and daily 

trading records in a manner “identifiable and searchable” by transaction and counterparty

pursuant to Regulations 23.201(a)(1), 23.202(a) and 23.202(b), subject to the condition that the 

Firms continue to maintain such records using existing search capabilities in their relevant 

systems;

(iii) the requirement that SDs and MSPs use a UTC timestamp when recording 

quotations prior to and at the time of execution of a swap pursuant to Regulations 

23.202(a)(1)(ii), (a)(2)(iv), (a)(3)(ii), (b)(3), and (b)(4), subject to the condition that the data 

recorded in local time is convertible to UTC within a reasonable time frame after a regulatory 

request for such time data; and, subject to the condition that the Firms will continue to commit to 

using a UTC time standard in newly installed or upgraded systems; and

(iv) the requirement that SDs and MSPs retain swap records at their principal places

of business or such other principal offices as designated by the SD or MSP, subject to the 

 

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In footnote 7 of No-Action Letter No. 12-29, the Division stated that it anticipates presenting the Commission with 

a proposed rule amendment that will clarify the principal place of business requirement found in Regulation 

23.203(a)(1). You have cited that footnote in your letter dated February 28, 2013. To be clear, the Division is not 

committed to presenting such a proposal and may choose not to do so. Whether or not the Division presents such a 

proposal has no bearing on the enforceability of, and covered persons’ obligations to comply with, this and related 

regulatory requirements.
SIFMA

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condition that records otherwise subject to 23.203(a)(1) be promptly available at the designated 

principal place of business or other such principal office located in the United States, its 

territories, or possessions within 72 hours upon request of a Commission representative.

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In granting SDs and MSPs additional time to comply with the aforementioned

requirements of Regulations 23.201, 23.202, and 23.203, the Division seeks to strike the 

appropriate balance between the statutory directives of section 731 of the Dodd-Frank Act and 

the need to provide market participants with sufficient time to adjust to regulatory changes. 

This letter, and the positions taken herein, represent the view of this Division only, and 

do not necessarily represent the position or view of the Commission or of any other office or 

division of the Commission. The relief issued by this letter does not excuse the affected persons

from compliance with any other applicable requirements contained in the Act or in the 

Regulations issued thereunder. Further, this letter, and the relief contained herein, is based upon 

the representations made to the Division. Any different, changed or omitted material facts or 

circumstances might render this letter void.

Should you have any questions, please do not hesitate to contact me at (202) 418-5977;

Frank Fisanich, Chief Counsel, at (202) 418-5949; Ward Griffin, Associate Chief Counsel, at 

(202) 418-5425; or Jason Shafer, Attorney-Advisor, at (202) 418-5097.

Very truly yours,

Gary Barnett

cc: Regina Thoele, Compliance

National Futures Association, Chicago

 

7 As stated in No-Action Letter No. 12-29, in developing further guidance on what is required to comply, DSIO staff 

will continue to consult with the Commission’s Division of Enforcement.