Join Alex Landy, Regulatory Analyst at Novatus Global, as he introduces the CFTC reporting capabilities of the Novatus En:ACT platform. Discover how En:ACT simplifies transaction reporting, reconciliation, and compliance management for derivatives trading, significantly reducing errors and operational workload. Featuring automated validation and comprehensive monitoring, En:ACT enables firms to ensure precise and timely CFTC reporting, proactively addressing regulatory changes and mitigating risk.
CFTC Reporting
with Novatus Global
Streamlining CFTC Reporting compliance with Novatus Global’s En:ACT platform for accurate, timely, and efficient regulatory reporting solutions in the financial sector.
What is CFTC Reporting?
The Dodd-Frank Act 2010 required the CFTC to set out rules that would regulate the swaps marketplace and facilitate market surveillance by US regulators seeking to improve market stability. The text puts regulatory obligations on different entity types to report all derivative transactions deemed eligible under multiple parts of the regulation; Part 43 of the regulatory text requires the real-time reporting and public dissemination of certain swap transaction and pricing data to improve transparency, and Part 45 requires the reporting of all eligible transactions to enable the monitoring of systemic risks.
Who is Required to Report Under CFTC Reporting?
Part 37
Swap Execution Facilities (SEFs)
Part 39
Derivatives Clearing Organisations (DCOs)
Part 23
Swap Dealers (SDs) and Major Swap Participants (MSPs)
Are there CFTC Reporting Exemptions and who do they Apply to?
Any US entity or natural person that is counterparty to a trade, but does not hold Swap Execution Facility, Derivative Clearing Organisation, Swap-Dealer or Major Swap Participant classification is exempt from transaction reporting under Part 43 and 45. As a single-sided reporting regime, there is only ever one version of a transaction that is reported, and reporting party determination is therefore required for any transaction where both counterparties hold one of these statuses.
Swap dealers are defined as those entities registered as such by the CFTC, based on entities that are “commonly known” as market makers in swaps. A market maker can be classified as an entity routinely standing ready to enter into swaps at the request of a counterparty, making a one-way market, or regular business activity such as swap dealing as a means of risk management that is indicative of swap dealing.
A Major Swap Participant is defined as a person or entity that satisfies any one of the following three Dodd-Frank definitions:
01
An entity that maintains a “substantial position” in any of the major swap categories, subject to exemptions
02
A person whose outstanding swaps create “substantial counterparty exposure that could have serious adverse effects on the financial stability of the United States banking system or financial markets”
03
Any “financial entity” that is “highly leveraged relative to the amount of capital such entity holds and that is not subject to capital requirements established by an appropriate Federal banking agency”
CFTC Reporting Deadlines and Requirements
Products
CFTC reporting covers all derivatives products that are not based on an underlying security, as the SEC regulates all security-based swaps. Therefore, products excluded from CFTC reporting are total return swaps based on ETFs, or custom baskets of securities that can be rebalanced on a discretionary basis.
Other exempt products include:
- FX Spots that do not form part of a swap
- Intragroup FX swap transactions for the purposes of hedging
- Foreign futures and options provided to customers in the US
Timelines
Part 43 requires real-time public price dissemination of any new transaction or price forming event on an existing transaction to be reported to the PPD dashboard within 15 minutes of execution.
Part 45 requires reporting of creation and continuation data no later than T+1 following execution.
Rewrite
Phase 1 of the CFTC Rewrite went live on 5th December 2022, adopting 78 CDE fields including the introduction of the Unique Transaction Identifier in place of the Unique Swap Identifier.
Phase 2 of the CFTC Rewrite went live on 29th January 2024, introducing the Unique Product Identifier for all asset classes except commodities.
Is CFTC Reporting Single or Double-Sided?
CFTC is a single-sided reporting regime, meaning only one version of a transaction is ever reported. Where both parties hold a reporting obligation, there must be a reporting party determination in absence of any alternative arrangement. Determining the entity who holds the reporting obligation for a given transaction depends on a number of factors, including:
- Entity definition (SEF/DCO/SD/MSP)
- Entity classification (financial vs non-financial)
- Domicile (US-person vs non-US person)
- Counterparty terms as stipulated by the SEF (where applicable)
- Bilateral counterparty agreement
Consequences of Non-Compliance with CFTC Reporting
The CFTC has mandate to issue fines to firms that do not comply with their reporting obligations and has increased the issuance of such fines post CFTC Rewrite go-live of December 2022.
In the period January 2023 through top December 2024, the CFTC fined six registered swap dealers, amounting to $60m in fines. Two SEFs also received fines for inaccuracies in creation data reporting in October 2024, highlighting the attention paid to all in-scope entities.
How Novatus Global Can Streamline Your CFTC Reporting
The En:ACT platform can support the following regulatory requirements:
- The seven-day error correction requirement set out by Part 45.14 can be supported through the output of either the Assurance or Reconciliation modules
- The thirty-day reconciliation requirement to internal books and records can also be supported by the Reconciliation and Completeness modules
CFTC Reporting FAQs
Common Mistakes with CFTC Reporting?
As a single-sided regime, eligibility by way of application of reporting party logic is a common error for firms resulting in over- or under-reporting which are the two major root causes of fines.
Can you delegate CFTC Reporting?
Delegation is not typical of CFTC transaction reporting as a result of the reporting hierarchy and reporting logic set out in Part 45.8 that aligns with reporting party determination.
Is Crypto Regulated by the CFTC?
The regulation of crypto partially falls under the CFTC, due to the interpretation of cryptocurrencies as commodities. However, there is no technical specification for the reporting is derivatives based on a crypto-asset. The CFTC have only charged a crypto firm (BitMEX) for breach of AML and KYC procedures.
What is a reportable position in CFTC?
Unlike EMIR, CFTC does not have a position-level reporting concept, therefore everything reported is done so at the transaction level.
Common Mistakes with CFTC Reporting?
As a single-sided regime, eligibility by way of application of reporting party logic is a common error for firms resulting in over- or under-reporting which are the two major root causes of fines.
Can you delegate CFTC Reporting?
Delegation is not typical of CFTC transaction reporting as a result of the reporting hierarchy and reporting logic set out in Part 45.8 that aligns with reporting party determination.
Is Crypto Regulated by the CFTC?
The regulation of crypto partially falls under the CFTC, due to the interpretation of cryptocurrencies as commodities. However, there is no technical specification for the reporting is derivatives based on a crypto-asset. The CFTC have only charged a crypto firm (BitMEX) for breach of AML and KYC procedures.
What is a reportable position in CFTC?
Unlike EMIR, CFTC does not have a position-level reporting concept, therefore everything reported is done so at the transaction level.
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