Executive Summary
- What is new: The CFTC’s Division of Market Oversight issued a no-action letter providing reporting counterparties relief from the requirement to report swap-reporting errors impacting less than 5% of their open swaps.
- Why it matters: This reduces the burden on reporting counterparties and the enforcement risk of failing to report de minimis errors.
- What to do next: Reporting counterparties should develop procedures for determining whether reporting issues fall below the 5% threshold.
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On July 31, 2025, the Commodity Futures Trading Commission’s (CFTC’s) Division of Market Oversight (DMO) issued a no-action letter that will provide reporting counterparties relief from the requirement to report swap reporting errors to the CFTC when the issue impacts only an immaterial volume of swaps.
The no-action letter relates to a CFTC rule issued in November 2020 that requires swap execution facilities (SEFs), designated contract markets (DCMs) and reporting counterparties to report a swap reporting error to the CFTC within 12 hours if the entity expects not to correct the error within seven business days. The notification requirement did not contain a materiality threshold — all errors that cannot be corrected within the rules’ time period, even those that impact just one swap, require a notification within 12 hours. The rule was issued despite that fact that the technical nature of swap data reporting makes errors common. The CFTC’s Division of Data currently receives over 150 notifications per month.
Under the no-action relief issued by the DMO, reporting counterparties will not face the risk of an enforcement action for failing to submit a swap data error correction notification if the number of reportable trades impacted is less than 5% of the reporting counterparty’s open swaps in that particular asset class. The letter permits reporting counterparties to voluntarily notify the CFTC of uncorrected errors, particularly those that may significantly impact data quality for the CFTC or in publicly disseminated data.
The relief does not apply to SEFs and DCMs, which are still required to report all uncorrected errors to the CFTC within 12 hours of determining that the entity will not timely correct the error.
The letter indicates that the no-action position will expire unless the CFTC issues a rule or order addressing the swap reporting error-notification requirements under Part 43 and Part 45, which is perhaps an indicator that the CFTC intends to issue a rule to supplant the no-action letter.
This memorandum is provided by Skadden, Arps, Slate, Meagher & Flom LLP and its affiliates for educational and informational purposes only and is not intended and should not be construed as legal advice. This memorandum is considered advertising under applicable state laws.