Summary:

Situation Overview: On July 31, 2025, the Commodity Futures Trading Commission (CFTC) provided reporting counterparties relief from the swap data repository (SDR) reporting requirement to submit an error correction notification (ECN) if an error does not exceed five percent of the reporting counterparty’s open swaps for the relevant asset class.

What: No-action position taken by the CFTC Division of Market Oversight (DMO) in CFTC No-Action Letter 25-25 in response to a joint request dated June 27, 2025 from the International Swap Dealer Association (ISDA) and Securities Industry and Financial Markets Association (SIFMA).

Who: The relief will impact reporting counterparties – including swap dealers and major swap participants – which are required to report swaps data to an SDR as part of the regulatory framework established by the Dodd-Frank Act.

In Depth

Reporting counterparties must correct any error in their SDR reporting “as soon as technologically practicable” and, “[i]n all cases, […] within seven business days” after its discovery. If they fail to do so, they must notify the CFTC’s DMO. The ECN must be in a specific format,[1] and include an initial assessment of the scope of the error(s) as well as a remediation plan (if any) for correcting the error(s). The seven-day window to provide the ECN shortens to 12 hours upon the reporting counterparty’s determination that it will fail to timely correct the error.

CFTC Regulation 45.14(a), which requires the ECN, does not establish a materiality threshold, thus forcing reporting counterparties to expend substantial resources to address even an immaterial error. As a result, ISDA and SIFMA jointly requested relief for a reporting counterparty if – at the time it initially discovers and assesses the impact of the error – it makes a reasonable determination that the proportion of reportable trades affected by the error is less than five percent of open swaps for the relevant asset class for which it was the reporting counterparty. The five percent threshold must be calculated by the reporting counterparty based on open swaps for purposes of the verification process required under CFTC Regulation 45.14(b).

On July 31, the CFTC’s DMO granted the relief requested by ISDA and SIFMA, with a reminder that the relief is not intended to restrict reporting counterparties from voluntarily contacting the CFTC about errors that do not exceed the five percent threshold if they believe the error significantly impacts data quality for the CFTC or users of the publicly disseminated swap transaction and pricing data.

The relief does not appear to extend to swap execution facilities (SEFs) and designated contract markets (DCMs), even though the ECN requirement applies to SEFs and DCMs.[2][3]

Looking Ahead

On April 4, 2025, the CFTC issued No-Action Letter 25-09 effectively eliminating pre-trade mid-market mark disclosure requirements for swap dealers and easing industry compliance burdens with swap dealer regulations. This marked the beginning of a broader shift toward increased no-action relief, signaling the CFTC’s willingness to provide regulatory flexibility in response to feedback from market participants.

The CFTC, under Acting Chairman Pham, will continue to tackle market structure changes and address longstanding challenges for the industry through pragmatic methods like no-action letters or staff advisories. While proactively resolving industry pain points, the CFTC has also been reminding registrants of their ongoing regulatory obligations. This was recently reflected by the CFTC’s Market Participants Division’s published responses to frequently asked questions regarding futures commission merchant (FCM) registration and the ongoing regulatory obligations of operating an FCM.[4] This balanced approach is anticipated to persist with a Senate-confirmed chairman, who may implement updated regulations or guidance for more enduring solutions.

Put Patomak’s Expertise to Work

With the regulatory landscape shifting and hints of future changes from regulators, firms must carefully address evolving expectations and guidelines. Changes in – or the withdrawal of – prior guidance present both opportunities and risks for market participants. Patomak is well-positioned to help market participants act on these developments strategically and responsibly.

Patomak has extensive experience in designing and assessing compliance programs at banks, swap dealers, broker-dealers, digital asset trading platforms, futures commission merchants, and other financial firms.

If Patomak can support your firm in navigating the evolving regulatory environment and achieving your strategic and compliance objectives, please reach out to Sudhir Jain at sjain@patomak.com and Anne Montminy at amontminy@patomak.com

 

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[1] On June 10, 2022, Division of Data staff published a staff advisory setting out the form and manner for submitting notifications required under Regulations 43.3(e)(1)(ii) and 45.14(a)(1)(ii). See CFTC Letter No. 22-06 (June 10, 2022), available at https://www.cftc.gov/csl/22-06/download.

[2] The CFTC’s no-action position is limited to “reporting counterparties” and does not mention of SEFs and DCMs. Furthermore, the related joint ISDA/SIFMA request for no-action relief does not reference SEFs or DCMs.

[3] SEFs have recently benefitted from CFTC relief in CFTC No-Action Letter 25-24  which provides assurance that the DMO would not recommend enforcement action against a SEF that does not provide a central limit order book as set forth in CFTC Regulation 37.3(a)(2) in connection with swap transactions executed on the SEF that are not subject to the trade execution requirement in CEA section 2(h)(8).

[4] See CFTC Market Participants Division Responds to Frequently Asked Questions Regarding Futures Commission Merchant Registration and Ongoing Regulatory Obligations (June 30, 2025), available at https://www.cftc.gov/media/12426/FCM_FAQs063025/download