Swap Confirmation Requirements for Swap Execution Facilities

Following a corresponding announcement in July 2023 (EventID 22513), the U.S. Commodity Futures Trading Commission (CFTC) has now published in the Federal Register its consultation on proposed amendments in relation to its swap confirmation requirements of Swap Execution Facilities (SEFs). Specifically, the Commission proposes to
– include new provisions under its enforceablity provision in 17 CFR Part 37 to oblige SEFs to provide to each counterparty to a transaction executed in accordance with the SEF’s rules a written record detailing all transaction terms. This record would take precedence over conflicting terms in any prior agreements and act as an official confirmation of the transaction. The confirmation process would have to occur promptly using available technology, although for certain bundled orders involving swaps, specific customer identifiers might be excluded from the confirmations.
– permit the incorporation by reference „terms from underlying, previously negotiated agreements governing such transaction between the counterparties“ in the confirmation statement for uncleared swap transactions.
– stipulate in 17 CFR Part 23, rule § 17.501 regarding swap confirmations that a swap transaction conducted through or in accordance with the regulations of a swap execution facility or designated contract market (DCM) will be considered as meeting the requirements for swap confirmation, as long as the rules of the swap execution facility or designated contract market state that confirmation of all transaction terms will occur promptly after execution based on technological feasibility.