Swap Trading Documentation Requirements for Swap Dealers

SIFMA and the International Swap Dealers Association (ISDA) provide comments to the Commodity Futures Trading Commission (CFTC) on swap trading relationship documentation requirements for swap dealers (SDs) and major swap participants (MSPs); and orderly liquidation termination provision in swap trading relationship documentation for swap dealers and major swap participants, RIN 3038-AC96.  The proposals would implement provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) regarding documentation and other requirements for SDs and MSPs.  SIFMA and ISDA support much the proposals.  The groups’ comments suggest ways in which the proposals can be clarified or refined to avoid undue costs and unintended consequences. But, the groups are deeply concerned that the CFTC’s proposal relating to valuation models and methods reflects fundamental misunderstandings of the processes by which swaps are negotiated and transacted, the nature of swap valuations and the causes of valuation disputes.