Commodity Futures Trading Commission ♦ Office of Public Affairs ♦ 202-418-5080

Commodity Futures Trading Commission

Office of Public Affairs

Three Lafayette Centre

1155 21st Street, NW

Washington, DC 20581

www.cftc.gov

Swap Transaction Compliance and Implementation Schedule: Trading 

Documentation and Margining Requirements under Section 4s of the CEA

The Commodity Futures Trading Commission (Commission) is proposing regulations that would establish a 

schedule to phase in compliance with the new trading documentation and margining requirements of the DoddFrank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act).

On July 21, 2010, the Congress passed the Dodd-Frank Wall Street Reform and Consumer 

Protection Act. Section 731 of the Dodd-Frank Act requires the Commission to adopt rules 

governing documentation standards for Swap Dealers (SD) and Major Swap Participants (MSP). 

As described in Section 4s(i)(1), these documentation standards, “relate to the timely and 

accurate confirmation, processing, netting, documentation, and valuation of all swaps.”

• On January 13, 2011, the Commission proposed regulations related to the Trading Documentation 

that SDs and MSPs must enter into with their counterparties in order to establish a swap trading 

relationship and document the swap transactions that occur pursuant to that relationship. Specifically SDs 

and MSPs would be required to establish, maintain, and enforce written policies and procedures designed to 

ensure that each SD or MSP and its counterparty agree in writing to all terms of their swap trading 

relationship and have executed all agreements required by the rules.

• In today’s Notice, the Commission is proposing a compliance schedule that is specific to the 

documentation requirements.

Section 731 of the Dodd-Frank Act also added a new Section 4s(e) to the CEA that requires the 

Commission to adopt rules establishing margin requirements for all registered SDs and MSPs that 

are not banks.

• On April 28, 2011, the Commission issued proposed regulations to implement the margin 

requirements for uncleared swaps for SDs and MSPs for which there is no prudential regulator. 

• In this Further Notice, the Commission is proposing a compliance schedule that is specific to the 

Margin Requirements proposed by the Commission.

The Commission believes that it is in the public interest to afford SDs and MSPs additional time to 

comply with proposed rules related to Trading Documentation and Margin Requirements, 

depending on the type of counterparty with which the SD or MSP is trading.

• Market participants that are financial entities, as defined in Section 2(h)(7)(C) of the CEA, are 

grouped into the following four categories: 

o Category 1 Entities include swap dealers, security-based swap dealers, major swap 

participants, major security-based swap participants, or active funds. 

o Category 2 Entities include commodity pools; private funds as defined in Section 202(a) of 

the Investment Advisors Act of 1940 other than active fund; employee benefit plans identified in 

paragraphs (3) and (32) of section 3 of the Employee Retirement Income and Security Act of 1974; 

or persons predominantly engaged in activities that are in the business of banking, or in activities 
Commodity Futures Trading Commission ♦ Office of Public Affairs ♦ 202-418-5080

that are financial in nature as defined in Section 4(k) of the Bank Holding Company Act of 1956, 

provided that the entity is not a third-party subaccount. 

o Category 3 Entities include Category 2 Entities whose positions are held as third-party 

subaccounts.

o Category 4 Entities includes any person not included in Categories 1, 2, or 3.

• For swap transactions with a Category 1 Entity, a covered swap entity and a swap dealer or major 

swap participant shall comply with the requirements no later than 90 days from the date of publication in 

the Federal Register. 

• For swap transactions with a Category 2 Entity, a covered swap entity and a swap dealer or major 

swap participant shall comply with the requirements no later than 180 days from the date of publication in 

the Federal Register.

• For swap transactions with a Category 3 Entity or a Category 4 Entity, a covered swap entity and a 

swap dealer or major swap participant shall comply with the requirements no later than 270 days from the 

date of publication in the Federal Register.

• Nothing in the rule shall prohibit any person from complying voluntarily with the requirements of § 

23.150 through § 23.158, and § 23.504 sooner than the implementation schedules proposed.