17 CFR 23.431 - Disclosures of material information.

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There are 4 Updates appearing in the Federal Register for 17 CFR 23. View below or at eCFR (GPOAccess)
§ 23.431 Disclosures of material information.
(a) At a reasonably sufficient time prior to entering into a swap, a swap dealer or major swap participant shall disclose to any counterparty to the swap (other than a swap dealer, major swap participant, security-based swap dealer, or major security-based swap participant) material information concerning the swap in a manner reasonably designed to allow the counterparty to assess:
(1) The material risks of the particular swap, which may include market, credit, liquidity, foreign currency, legal, operational, and any other applicable risks;
(2) The material characteristics of the particular swap, which shall include the material economic terms of the swap, the terms relating to the operation of the swap, and the rights and obligations of the parties during the term of the swap; and
(3) The material incentives and conflicts of interest that the swap dealer or major swap participant may have in connection with a particular swap, which shall include:
(i) With respect to disclosure of the price of the swap, the price of the swap and the mid-market mark of the swap as set forth in paragraph (d)(2) of this section; and
(ii) Any compensation or other incentive from any source other than the counterparty that the swap dealer or major swap participant may receive in connection with the swap.
(b) Scenario Analysis. Prior to entering into a swap with a counterparty (other than a swap dealer, major swap participant, security-based swap dealer, or major security-based swap participant) that is not made available for trading, as provided in Section 2(h)(8) of the Act, on a designated contract market or swap execution facility, a swap dealer shall:
(1) Notify the counterparty that it can request and consult on the design of a scenario analysis to allow the counterparty to assess its potential exposure in connection with the swap;
(2) Upon request of the counterparty, provide a scenario analysis, which is designed in consultation with the counterparty and done over a range of assumptions, including severe downside stress scenarios that would result in a significant loss;
(3) Disclose all material assumptions and explain the calculation methodologies used to perform any requested scenario analysis; provided however, that the swap dealer is not required to disclose confidential, proprietary information about any model it may use to prepare the scenario analysis; and
(4) In designing any requested scenario analysis, consider any relevant analyses that the swap dealer undertakes for its own risk management purposes, including analyses performed as part of its “New Product Policy” specified in § 23.600(c)(3).
(c) Paragraphs (a) and (b) of this section shall not apply with respect to a transaction that is:
(1) Initiated on a designated contract market or a swap execution facility; and
(2) One in which the swap dealer or major swap participant does not know the identity of the counterparty to the transaction prior to execution.
(d) Daily mark. A swap dealer or major swap participant shall:
(1) For cleared swaps, notify a counterparty (other than a swap dealer, major swap participant, security-based swap dealer, or major security-based swap participant) of the counterparty's right to receive, upon request, the daily mark from the appropriate derivatives clearing organization.
(2) For uncleared swaps, provide the counterparty (other than a swap dealer, major swap participant, security-based swap dealer, or major security-based swap participant) with a daily mark, which shall be the mid-market mark of the swap. The mid-market mark of the swap shall not include amounts for profit, credit reserve, hedging, funding, liquidity, or any other costs or adjustments. The daily mark shall be provided to the counterparty during the term of the swap as of the close of business or such other time as the parties agree in writing.
(3) For uncleared swaps, disclose to the counterparty:
(i) The methodology and assumptions used to prepare the daily mark and any material changes during the term of the swap; provided however, that the swap dealer or major swap participant is not required to disclose to the counterparty confidential, proprietary information about any model it may use to prepare the daily mark; and
(ii) Additional information concerning the daily mark to ensure a fair and balanced communication, including, as appropriate, that:
(A) The daily mark may not necessarily be a price at which either the counterparty or the swap dealer or major swap participant would agree to replace or terminate the swap;
(B) Depending upon the agreement of the parties, calls for margin may be based on considerations other than the daily mark provided to the counterparty; and
(C) The daily mark may not necessarily be the value of the swap that is marked on the books of the swap dealer or major swap participant.

Title 17 published on 2013-04-01

The following are only the Rules published in the Federal Register after the published date of Title 17.

For a complete list of all Rules, Proposed Rules, and Notices view the Rulemaking tab.

  • 2013-11-06; vol. 78 # 215 - Wednesday, November 6, 2013
    1. 78 FR 66621 - Protection of Collateral of Counterparties to Uncleared Swaps; Treatment of Securities in a Portfolio Margining Account in a Commodity Broker Bankruptcy
      GPO FDSys XML | Text
      COMMODITY FUTURES TRADING COMMISSION
      Final rule.
      Effective date: This rule is effective January 6, 2014. Compliance dates: For uncleared swap transactions that are entered into with “new counterparties,” 1 all persons shall be in compliance with the requirements set forth in Subpart L of Part 23 not later than May 5, 2014. For uncleared swap transactions that are entered into with “existing counterparties,” 2 all persons shall be in compliance with the requirements set forth in Subpart L of Part 23 not later than November 3, 2014. All parties must comply with the Part 190 rules by January 6, 2014.
      17 CFR Parts 23 and 190

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United States Code
Statutes at Large

Title 17 published on 2013-04-01

The following are ALL rules, proposed rules, and notices (chronologically) published in the Federal Register relating to 17 CFR 23 after this date.

  • 2013-11-06; vol. 78 # 215 - Wednesday, November 6, 2013
    1. 78 FR 66621 - Protection of Collateral of Counterparties to Uncleared Swaps; Treatment of Securities in a Portfolio Margining Account in a Commodity Broker Bankruptcy
      GPO FDSys XML | Text
      COMMODITY FUTURES TRADING COMMISSION
      Final rule.
      Effective date: This rule is effective January 6, 2014. Compliance dates: For uncleared swap transactions that are entered into with “new counterparties,” 1 all persons shall be in compliance with the requirements set forth in Subpart L of Part 23 not later than May 5, 2014. For uncleared swap transactions that are entered into with “existing counterparties,” 2 all persons shall be in compliance with the requirements set forth in Subpart L of Part 23 not later than November 3, 2014. All parties must comply with the Part 190 rules by January 6, 2014.
      17 CFR Parts 23 and 190