01 May 2012

CFTC votes to clarify indemnification and confidentiality provisions in the Dodd-Frank Act

The proposal generally exempts foreign regulators from the indemnification and confidentiality provision in the Dodd-Frank Act, and ensures that foreign regulators have access to data in Swap Data Repositories (SDRs).

Because some registered SDRs may also be registered, recognised or otherwise authorised in a foreign jurisdiction and may accept swap data reported pursuant to a foreign regulatory regime, the Commission concludes that the confidentiality and indemnification provisions of CEA section 21(d) generally apply only to such data reported pursuant to the CEA and Commission regulations.

The Commission further concludes that the confidentiality and indemnification provisions of section 21(d) should not operate to inhibit or prevent foreign regulatory authorities from accessing data in which they have an independent and sufficient regulatory interest—even if that data also has been reported pursuant to the CEA and Commission regulations. The Commission concludes that application of the requirements of CEA section 21(d) in these circumstances is unreasonable in light of, among other things:

• the importance of such data to the foreign jurisdiction’s regulatory regime;
• foreign regulators’ interest in unfettered access to such data; and
• traditions of mutual trust and cooperation among international regulators.

Accordingly and more specifically consistent with the Commission’s Final SDR Rules, the Commission proposes to interpret CEA section 21(d) such that a registered SDR would not be subject to the confidentiality and indemnification provisions of that section if:

• such registered SDR is also registered, recognised or otherwise authorised in a foreign jurisdiction’s regulatory regime; and
• the data sought to be accessed by a foreign regulatory authority has been reported to such registered SDR pursuant to the foreign jurisdiction’s regulatory regime.

Considerations Relevant to the Commission’s Proposed Interpretative Statement: International Considerations

The Commission remains committed to a cooperative international approach to the registration and regulation of SDRs, has consulted extensively with various foreign regulatory authorities in promulgating both its proposed and SDR Final Rules, and continues to work with these authorities to ensure appropriate access to swap data in SDRs. During its consultations, many foreign regulatory authorities expressed concern about the difficulty in complying with the indemnification provisions of CEA section 21(d).

As a consequence of these consultations with foreign regulatory authorities, and pursuant to the mandate for international cooperation in section 752 of the Dodd-Frank Act, the Commission has concluded that further guidance is necessary to ensure that appropriate access by foreign regulatory authorities is not inhibited.

While the SDR Final Rules address access to data by foreign regulators which have supervisory authority and regulatory responsibility over SDRs, the Commission is proposing an interpretative statement to ensure that other foreign regulators also receive sufficient access to data held in SDRs, which is reported pursuant to a foreign regulatory regime and where such foreign regulators have a sufficient and independent regulatory interest.

Public Comment Requested

The Commission requests comment on all aspects of its proposed interpretative statement. In particular, the Commission requests comment addressing whether and how the timing and implementation of foreign jurisdictions’ regulatory regimes affect the Commission’s proposed statement.

Press release

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