October 24, 2025

Submitted Electronically

Mr. Christopher Kirkpatrick
Secretary
U.S. Commodity Futures Trading Commission
Three Lafayette Centre
1155 21st St., N.W.
Washington, DC 20581

Re: Revisions to Business Conduct and Swap Documentation Requirements for Swap Dealers and Major Swap Participants (RIN 3038-AF38)

Dear Mr. Kirkpatrick:

The International Swaps and Derivatives Association, Inc. (“ISDA”) and the Securities Industry and Financial Markets Association (“SIFMA”) (collectively, the “Associations”)¹ appreciate the opportunity to submit these comments on the Commodity Futures Trading Commission’s (“CFTC” or “Commission”) proposed Revisions to Business Conduct and Swap Documentation Requirements for Swap Dealers and Major Swap Participants (“Proposal”) published in the Federal Register on September 30, 2025.²

The Associations strongly support the Commission’s efforts to address long-standing issues with the external business conduct (“EBC”) standards and swap trading relationship documentation (“STRD”) requirements. We commend the Commission for proactively and thoughtfully adjusting its regulatory framework to reflect contemporary market practices and ensure that disclosure and documentation requirements remain effective, practicable, and fit-for-purpose. We particularly applaud the Commission for recognizing that certain disclosure obligations, such as the pre-trade mid-market mark (“PTMMM”) disclosure, should be eliminated as they provide no utility to counterparties and cause unnecessary delays in swaps trading.³ The Commission’s willingness to recalibrate its rules in light of experience and market practice reflects a pragmatic and market-focused approach to regulation.

In addition, we appreciate the Commission’s recognition that certain aspects of the EBC and STRD rules have impeded the efficient trading of cleared swaps, and that other aspects of those same rules make compliance either impossible or impracticable in the context of swaps executed pursuant to prime brokerage arrangements. Indeed, to date, these issues have been temporarily addressed by a series of staff-issued no-action relief. We strongly support the Commission’s efforts to implement a permanent solution to address these issues in the Proposal. By aligning its rules more closely to existing long-standing no-action relief, the Commission ensures that its disclosure framework reflects existing market conventions and enhances legal and regulatory certainty.

Overall, the Associations fully endorse the Proposal and urge that it be codified expeditiously, as it will provide long-overdue efficiencies to swaps trading and regulatory certainty to swap market participants. Below, we offer a more detailed explanation of why we strongly support certain aspects of the Proposal. We also provide constructive suggestions to fine-tune other aspects of the Proposal in a manner that aligns with the Commission’s objectives.

I. PTMMM and Scenario Analysis Obligations

The Associations unequivocally support the Commission’s proposal to eliminate both the PTMMM and scenario analysis requirements.⁴

The PTMMM requirement, while well-intentioned, has not achieved its intended purpose of providing additional price transparency. Non-dealer counterparties are generally sophisticated market participants and already have access to a wide range of pricing data and extremely advanced modeling tools, making the PTMMM disclosure of little value to them⁵—so much so that buy-side market participants have advocated for its removal.⁶

Further, the swaps market has significantly evolved since 2012, when the requirement was put in place. There is now a substantial amount of publicly available information that has contributed to transparency in swaps pricing, including real-time reporting data.⁷ As a result, counterparties frequently request that swap entities either refrain from providing the PTMMM or ask swap entities to send such marks to a rarely monitored e-mail address due to the limited benefits of receiving such disclosure.⁸  In short, the PTMMM requirement presumes an imbalance between swap entities and their counterparties that simply does not exist in practice.⁹

Similarly, with respect to obligations related to providing scenario analysis, we understand from both sell- and buy-side members that it is extremely rare for scenario analysis to be requested, indicating that it is of little utility to the buy-side. In addition, the definition of “scenario analysis” requirement is both broadly and vaguely drafted, presenting significant compliance challenges and legal risk for swap entities, without commensurate benefit to counterparties.

Critically, as the Commission acknowledges, both requirements were not mandated by the Dodd-Frank Act and removing these requirements would align with the business conduct rules of the U.S Securities and Exchange Commission (“SEC”), which do not impose either obligation in the context of security-based swaps.

For these reasons, we fully endorse the Commission’s proposal to eliminate the PTMMM requirement and scenario analysis disclosure obligation and further encourage the Commission to do so expeditiously.

II. Daily Mark Disclosure Requirement

The Associations support the Commission’s intent in revising the daily mark disclosure requirement to reduce existing compliance and operational burdens associated with complying with similar, but not identical, criteria for calculating the valuation of a swap. However, rather than aligning the daily mark with the variation margin calculation and calculation for valuation data reporting, the Associations believe that a better, more streamlined approach would be to (1) amend the definition of “daily mark” to provide swap entities with more flexibility in determining the mark; and (2) eliminate the daily mark requirement for all non-cleared swaps
that are subject to daily variation margining.

The Proposal acknowledges that the current definition of the daily mark is problematic as it differs from other, similar valuations required under the CFTC rules such as those made pursuant to daily variation margining and swap valuation reporting. Instead of attempting to align the daily mark as proposed, the Associations believe a simpler approach would be to provide flexibility in the definition of the daily mark, while still maintaining requirements for swap entities to disclose the methodologies and assumptions used to prepare the daily mark. Providing flexibility, as opposed to aligning the definition, has the added benefit of avoiding new
operational builds given current well-established operational and compliance systems, as well as analogous requirements for security-based swaps. We have outlined our proposed revisions to the definition in Appendix A of this letter.

We also think this approach would better enable firms to align their daily mark disclosures under CFTC rules with the methodologies they use for other purposes, whether for reporting, for daily mark disclosures under SEC rules, for internal valuation purposes, or otherwise. Further, given the institutional nature of the swap market, disclosure of daily mark methodologies and assumptions should provide counterparties with sufficient information to understand the daily marks they receive. Also, as noted above, increased overall swap market transparency gives counterparties other data points they can use to assess the daily marks disclosed to them.¹⁰

In addition, as the Proposal acknowledges, where non-cleared swaps are subject to daily variation margining, a daily valuation is already required and provided. Counterparties therefore already receive a valuation that is consistent with the parties’ agreement under their Credit Support Annex (CSA). The Associations believe that such valuation should be sufficient, and deemed, to fulfill the obligation to provide a “daily mark” under the Commodity Exchange Act.

The benefit of this approach is twofold. First, it eliminates unnecessary regulatory duplication, which only increases the cost and complexity of compliance with no added value to regulatory oversight. Second, it prevents client confusion under the status quo caused by counterparties receiving two different valuation numbers for the same swap.

For counterparties whose non-cleared swaps are not subject to daily variation margining, we believe that making the changes set out in the Proposal could introduce additional costs and complexities relative to the status quo, including potential challenges arising from resulting differences between how daily marks are calculated under the Commission’s rules and those of the SEC.

In Appendix A of our letter, we have provided a mark-up of the current daily mark requirement, which includes the aforementioned recommendations of providing more flexibility in the determination of a daily mark and an exception for swaps subject to daily variation margining.

1. Information regarding the Associations is available in Appendix C. [↩]
2. 90 Fed. Reg. 47136 (Sept. 30, 2025) [↩]
3. Id. at 47141. [↩]
4. 17 C.F.R. § 23.431(a)(3)(i); 17 C.F.R. § 23.431(b) [↩]
5. See ISDA KISS Letter, available at https://www.isda.org/2017/10/19/isda-response-to-cftc-project-kiss/; SIFMA KISS Letter, available at https://www.sifma.org/resources/submissions/letters/response-to-cftcs-kiss-initiative-regarding-external-businessconduct-requirements/ (noting that PTMMMs are not requested by clients). [↩]
6. See SIFMA Asset Management Group Letter in Response to CFTC Project KISS, available at: https://www.sifma.org/wpcontent/uploads/2017/10/SIFMA-AMG-Comments-on-CFTCs-Project-KISS.pdf (stating that: (1) the CFTC should eliminate the PTMMM requirement, and instead, “target market needs more efficiently”; and (2) the PTMMM requirement “create[s] unnecessary burden upon dealers” and “costs imposed upon dealers translate into higher costs for investors utilizing swaps for investment strategies.”). [↩]
7. 17 C.F.R. Part 43. [↩]
8. See SIFMA SEC Comment Letter (Aug. 7, 2015), available at https://www.sec.gov/comments/s7-25-11/s72511-55.pdf (arguing
   that the SEC should not impose a PTMMM requirement given SDs’ experience with the CFTC’s requirement, and notably, the SEC declined to adopt a PTMMM requirement). [↩]
9. In addition, the PTMMM requirement continues to impose significant compliance challenges and operational burdens on swap entities. Swap entities utilize complex infrastructure to calculate and deliver the mid-market marks in real-time, which requires a combination of sophisticated pricing models, real-time market data access and legal risk assessment mechanisms. The compliance costs and operational burdens associated with maintaining such an infrastructure far outweigh any perceived transparency benefits of the PTMMM disclosure. [↩]
10. As the Proposal points out, Part 45 of the Commission’s regulations define ‘‘valuation data’’ by cross-referencing § 23.431. We would support maintaining the cross-reference, with the changes to § 23.431 outlined in Appendix A of our letter, and we believe such definition should supersede other references to valuation data in Appendix 1 to Part 45. [↩]