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Enhancing Disclosure Requirements for Derivatives
May 11, 2023Two settled enforcement actions in April 2023 indicate that the Commodity Futures Trading Commission (“CFTC”) is expecting increased swaps disclosure by swap dealers under the Dodd-Frank Act of 2010 and applicable CFTC regulations.
In the first enforcement action, the CFTC sanctioned a U.S. swap dealer for failing to comply with CFTC Regulation § 23.431, which requires a swap dealer, among other things, to provide pre-trade mid-market marks (“PTMMM”) before each transaction to allow its non-swap dealer counterparties to “make their own informed decisions about the appropriateness of entering into the swap.” Pre-trade mid-market marks are intended to represent an “objective value,” providing counterparties with “a baseline to assess swap valuations.”
