One Consequence of Becoming a SEF Member - Increased Recordkeeping Requirements

We wanted to raise awareness on a point that has not received much attention to date: increased recordkeeping requirements for SEF members. At the outset, many SEFs use the term "participant" synonymously with "member." So, if you are one of the many swap market participants who have received a "Participant Agreement" in the past month, then this posting applies to you.

In December 2012, The CFTC amended Rule 1.35(a)(1) to include SEFs and SEF members. Now that the SEF rules have been finalized, and SEFs are operating, the recordkeeping requirements are beginning to apply to many end users. CFTC Rule 1.35(a)(1) details recordkeeping requirements for both written and oral records, but the CFTC exempted many entities from maintaining oral records (i.e., recording phone lines). The written recordkeeping requirement remains for all SEF members. These written recordkeeping requirements exceed what is required for OTC swaps.