Executive Summary
- What’s new: The CFTC has proposed to eliminate the requirement that swap dealers and major swap participants provide “pre-trade mid-market marks” to counterparties before entering into a swap. The change would codify the position the CFTC took in an April 2025 no-action letter.
- Why it matters: The rule amendment would reduce the operation burden on swap dealers and major swap participants and harmonize the CFTC’s rules with those of the SEC and Municipal Securities Rulemaking Board.
- What to do next: The CFTC said that, while it considers the amendments, it will continue to adhere to its position in the April no-action letter, which effectively removed the PTMMM requirement for swap dealers and major swap participants. The comment period on the proposal is open until October 24, 2025.
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On September 24, 2025, the Commodity Futures Trading Commission (CFTC) issued a Notice of Proposed Rulemaking proposing amendments to the CFTC’s business conduct and swap trading relationship documentation rules applicable to swap dealers and major swap participants (Swap Entities). Notably, the proposed rule would eliminate the requirement that Swap Entities provide their non-Swap Entity counterparties a “pre-trade mid-market mark” (PTMMM) prior to entering into a swap.
The PTMMM requirement, which was adopted in 2012, was intended to provide counterparties with pricing information to facilitate negotiation of the swap. The CFTC had brought a number of enforcement actions for failing to satisfy the PTMMM requirement. Earlier this year, however, the CFTC issued Staff Letter No. 25-09, which provided no-action relief from the PTMMM requirement in response to concerns that the requirement provided counterparties limited value while imposing significant burdens on Swap Entities and impeding the prompt execution of swaps.
The CFTC has provided several reasons for proposing to eliminate the PTMMM requirement. The CFTC believes that removing the requirement would support the goal of increasing the efficiency of the swap market. Additionally, it concluded that the PTMMM requirement does not provide meaningful benefits to counterparties and delays efficient trade execution. The proposed change would also harmonize the CFTC’s rules with those of the Securities and Exchange Commission, promoting consistency across regulatory frameworks. Furthermore, the CFTC concluded that swap dealers would benefit from reduced costs related to the preparation and disclosure of the PTMMM.
The proposed rule would also define, and provide exemptions from, external business conduct requirements for swaps intended to be cleared and swaps executed pursuant to prime broker arrangements, which previously were the subject of no-action relief.
Swaps intended to be cleared would be defined, generally, as swaps that will be executed with the intent to be cleared contemporaneously, and deemed void if they are rejected from clearing. Such swaps would be exempt from a number of External Business Conduct Standard and swap trading relationship documentation requirements.
Swaps executed pursuant to prime brokerage arrangements will be exempt from the pre-trade price disclosure requirement (and the PTMMM requirement, if not eliminated entirely). Finally, the amended rule would eliminate the requirement that Swap Entities provide counterparties, upon request, a scenario analysis.
The proposal indicates that the no-action position outlined in CFTC Staff Letter 25-09 will remain in effect until the CFTC adopts a final rule addressing the PTMMM requirement.
Comments on the proposal must be submitted to the CFTC on or before October 24, 2025.
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