CFTC’s temporary pause on swap-reporting eases pressure on dealers — but blurs the market picture

Relief arrives — and so do new questions for swap markets

The Commodity Futures Trading Commission’s staff has handed the swaps market a temporary reprieve from parts of the data-reporting rules that have driven compliance projects for years. The no-action letter pauses enforcement of certain Parts 43 and 45 obligations, giving dealers, swap execution facilities (SEFs) and swap data repositories (SDRs) time to adjust systems and agree common approaches. For traders, that means less immediate public price data in certain corners of the market. For operations teams, it buys a few weeks to fix broken feeds, clarify reporting logic and avoid rushed, risky fixes.

What the no-action letter actually allows (and what it doesn’t)

The staff letter is narrowly practical: it promises not to recommend enforcement for some failures to comply with select Parts 43 and 45 requirements while the CFTC considers longer-term changes. The relief covers main reporting pathways — trade-level public reporting under Part 43 and the required reporting to SDRs under Part 45 — but only for limited fields and specific transaction types. It is temporary, conditional, and targeted at regulated entities such as swap dealers, major swap participants, SEFs and SDRs.

Key elements market teams should note: the letter is an enforcement pause, not a rule change. That means regulated firms remain legally required to make best-effort reporting and to document the reasons they rely on the letter. The carve-out typically applies only until the CFTC issues final guidance or a formal rule amendment, and it can include firm-specific conditions: for example, firms may have to certify they are taking active steps to achieve full compliance, fix automated mappings, or agree timelines with SDRs to normalize feeds.

Importantly, the letter does not erase firms’ recordkeeping obligations, nor does it shield intentional misreporting or failures that pose systemic risk. Participants who take advantage of the relief must still maintain internal audit trails and be ready to produce records showing their good-faith efforts to comply.

How trading, pricing and operations will feel the change

In the immediate term the relief reduces the pressure to push incomplete or inaccurate trade prints into public feeds. That is positive for dealers’ operations: a common complaint has been that aggressive enforcement forces rushed fixes, which in turn create erroneous public prices and confusing trade records.

For market liquidity the effect is mixed. Dealers and SEFs can prioritize execution over forced reporting fixes, which should help keep markets open and reduce execution delays on complex swaps. That tends to be good for day-to-day liquidity. On the other hand, when public prints or SDR consolidated feeds are thinner or delayed, buy-side desks and other market centers lose a piece of the visible pricing puzzle. Less transparent pricing can widen bid-ask spreads in less liquid contracts and force some investors to rely more heavily on dealer quotes rather than public tape.

Compliance costs fall in the short run — fewer emergency system patches, less overtime for reporting teams — but the relief is not free. Firms now face operational risk from mismatched internal books, potential downstream reconciliation headaches, and a race to re-align data contracts with SDRs once the pause ends. Counterparties that depend on all-in public prints to price bespoke trades will have to manage larger blind spots for a while.

How we got here — a short history of Parts 43 and 45

Parts 43 and 45 were written after the 2008 crisis to make swap markets more visible and to bring dealer-intermediated trading into a public framework. Part 43 focuses on public reporting of transaction and pricing information soon after execution, while Part 45 sets out what trade and portfolio data firms must send to SDRs so regulators and counterparties can reconstruct positions.

Over time, the rules have proven technically hard to implement. Market participants and SDRs disagree about field definitions, timestamping, and whether certain bespoke trades are suitable for public printing. The CFTC has issued guidance in the past and used no-action letters to buy time while rulemakings catch up. The current letter is the latest example: staff recognition that complex operational issues require coordinated fixes rather than immediate enforcement.

There’s also an international angle. Other jurisdictions, from the EU’s EMIR rules to various Asian reporting regimes, have taken different technical approaches. The CFTC’s pause gives U.S. market participants a bit more space to align with global counterparts, but it also leaves temporary divergence in what data is visible across borders.

Early reactions from the trading floor and compliance teams

Market reactions were predictably split. A senior compliance officer at a global dealer told Augury Times that the letter “gives us breathing room and stops us from shipping half-baked fixes that would create worse data noise.” An operations executive at a mid-sized SEF said the move reduces the chance of execution delays caused by last-minute reporting checks.

By contrast, a portfolio manager at an asset manager worried aloud: “Public data is our reference; when it thins, valuation gets harder and we rely more on dealer quotes — that raises counterparty concentration risk.” A market structure analyst noted that SDRs will need clear timelines to restore full reporting; without that, the temporary relief could leave persistent gaps in consolidated swap data.

What investors and compliance teams should watch next

For investors: the letter is a short-term boost to market functioning but a caution about transparency. Expect better execution continuity, but watch for widening spreads or odd price moves in less liquid swap types where reporting pauses bite. Track SDR consolidated data for holes and be ready to lean on multiple price sources.

For compliance and operations teams: treat the no-action letter as conditional breathing room. Document every decision to rely on it, set clear internal timelines to restore full reporting, and coordinate with SDRs and SEFs on field mappings. Monitor subsequent CFTC guidance or rulemakings closely: the temporary pause will end, and regulators will expect firms to be closer to full compliance by then.

Ultimately, the letter buys time to fix hard technical problems without forcing a surge of sloppy fixes into the public tape. That is welcome. But the trade-off is a short spell of reduced transparency. Investors who understand that trade-off — and firms that use the time to build durable fixes — will fare best when the pause ends.

Sources

• cftc.gov