On July 31, 2025, the Commodity Futures Trading Commission’s Division of Market Oversight (CFTC) issued a no-action letter granting relief to reporting counterparties from the swap data reporting error correction notification (ECN) requirements under CFTC regulations.1 The no-action position responds to a joint request from the International Swaps and Derivatives Association (ISDA) and the Securities Industry and Financial Markets Association (SIFMA), citing the disproportionate burden of reporting immaterial errors. This no-action relief marks a significant shift toward a more pragmatic regulatory approach, reducing compliance burdens for market participants and acknowledging the operational challenges of correcting minor data errors.
The CFTC’s no-action position relates to CFTC regulations which require swap execution facilities (SEFs), designated contract markets (DCMs), and reporting counterparties to submit an ECN within 12 hours if the entity does not expect to correct the swap data reporting error within seven business days. Pursuant to the no-action letter, the CFTC will not recommend enforcement action against a reporting counterparty that fails to submit an ECN if, at the time of discovery and initial assessment, the counterparty reasonably determines that the error affects less than 5% of its open swaps in the relevant asset class. This 5% threshold is calculated based on the swap data verification process required of reporting counterparties under CFTC regulations.
The relief applies only to reporting counterparties, and does not extend to SEFs or DCMs, which remain subject to the full ECN requirements. Further, the no-action letter does not preclude voluntary notifications. The no-action letter encourages counterparties to submit an ECN, even if below the threshold, if such a swap reporting error may significantly impact data quality for the CFTC or for users of publicly disseminated swap transaction and pricing data. The CFTC’s no-action position is temporary and shall expire upon the applicable compliance date of any future rulemaking or CFTC action addressing the notification obligations under applicable CFTC regulations.
As a result of this change in the CFTC’s approach to the swap data reporting ECN requirements, firms should consider (1) reviewing and updating internal procedures to incorporate the 5% materiality threshold; and (2) documenting any reasonable determinations it makes regarding error impact to support reliance on the no-action relief.
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1 See CFTC Release No. 9103-25, CFTC Staff Issues No-Action Letter Regarding Swap Data Error Correction Notification Requirements (July 31, 2025), available at https://www.cftc.gov/PressRoom/PressReleases/9103-25.
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