Comment Letter on Proposed Rulemaking for Swap Trading Relationship Documentation Requirements for Swap Dealers and Major Swap Participants

MFA submitted a comment letter to the CFTC on its proposed rules on Swap Trading Relationship Documentation Requirements for Swap Dealers and Major Swap Participants. In our letter, we expressed concern that the proposed rules, coupled with other proposed CFTC regulations concerning swap documentation, would disadvantage customers in negotiating swap documentation and requested that the CFTC eliminate the requirement for senior management approval. We also recommended that the CFTC not adopt the prescriptive approach of requiring inclusion of valuation methodology in swap documentation and instead preserve market flexibility for valuation. Although we supported the CFTC adopting rules on resolution of valuation disputes, we questioned regulators need to receive notice of every unresolved dispute and suggested that the CFTC adjust the notice periods and incorporate a materiality threshold. We also asked the CFTC to harmonize the timing of confirmation as set forth in the proposed rules with the timing set forth it its proposed rules on Confirmation, Portfolio Reconciliation and Portfolio Compression Requirements for Swap Dealers and Major Swap Participants.

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