Overview
On July 31, 2025, the Commodity Futures Trading Commission's (CFTC) Division of Market Oversight (DMO) issued a No-Action Letter providing relief from swap data error correction notification requirements.1 Under the No-Action Letter, DMO will not recommend that the commission take an enforcement action against a swap reporting counterparty for failing to submit an error correction notification to the CFTC where trades affected by an error do not exceed 5% of open swaps in the particular asset class for which it was the reporting counterparty. By applying a 5% threshold, DMO is adopting a materiality standard that should alleviate pressures on firms to disclose infrequent or minor errors in swap trade reporting data.
Previously, a reporting counterparty, swap execution facility (SEF), or designated contract market (DCM), was required to complete and submit an error notification form for any error in swap trade reporting data that was not corrected within seven business days of its discovery.2 The No-Action Letter was issued in response to a request from the International Swaps and Derivatives Association (ISDA) and the Securities Industry and Financial Markets Association (SIFMA), pursuant to CFTC Rule 140.99.3
Regulatory Background
Parts 43 and 45 of CFTC regulations mandate the submission of publicly reportable swap transactions and pricing data and required swap creation and continuation data to a swap data repository (SDR). These regulations assign single-side reporting responsibility to a reporting counterparty, SEF, or DCM, obligating a specific party to report the transactions, or to assign regulatory responsibility in writing, in satisfaction of both real-time (Part 43) and SDR reporting (Part 45) standards.4 A reporting counterparty is often a registered swap dealer, but can also include a major swap participant or unregistered entity (e.g., a bank or de minimis dealer).
In 2020, the CFTC revised Parts 43 and 45 (the Rewrite) by, among other things, mandating that reporting counterparties, DCMs, and SEFs notify the Director of the CFTC's Division of Data or Division of Market Oversight (DMO) if they have failed to timely correct any error in their swap reporting data.5 Swap reporting rules provide that any data reporting errors must be corrected "as soon as technologically practicable," but in any case "within seven business days after discovery."6
"Timely" is defined as being seven business days following the date of an error’s discovery. Any party that determines it will fail to timely correct a data error must notify the relevant division within 12 hours of making such a determination.7
The notification filing generally includes an initial assessment of the scope of the discovered error(s) and an initial remediation plan for correcting the error(s).8 The CFTC Division of Data previously published a staff advisory setting out the form and manner for submitting such notifications on June 22, 2022, with compliance beginning on December 5, 2022.9
No-Action Request
ISDA and SIFMA requested a no-action position on the error correction notification where the errors do not exceed a given threshold, for which they provided two rationales.10 First, ISDA and SIFMA argued that the error correction notification requirements impose substantial cost on reporting counterparties, especially since changing lines of code (including design and testing) may take longer than seven business days. And second, ISDA and SIFMA argued that CFTC staff "'inundated' with swap reporting error notifications."11 Indeed, DMO noted that it received about 150 error correction notifications per month.12
No-Action Letter
The CFTC agreed on the need for a no-action position, based on ISDA and SIFMA's arguments "and staff's discussions with various reporting counterparties during the past two and a half years."13 Now, if the reporting counterparty "makes a reasonable determination" that the number of reportable trades affected by the error do not exceed five percent of its open swaps in the relevant asset class for which the reporting counterparty has a reporting obligation, then DMO will not recommend the CFTC take an enforcement action against the reporting counterparty with respect to the error.14 As noted above, the codified regulations do not include any other safe harbor or exceptions from error notification requirements.
Takeaways
Enforcement Treatment
In April, the CFTC published a staff advisory establishing an internal standard for referrals by the CFTC's operating divisions, including DMO and the Market Participants Division and Division of Clearing and Risk, to the Division of Enforcement.15 Under the terms of that advisory, only "material" supervisory or non-compliance issues should result in referral to the Division of Enforcement.
Although swap reporting charges will likely occur less frequently under new CFTC leadership,16 this No-Action Letter helps quantify the degree to which swap reporting errors can occur (and persist) without being referred to the Division of Enforcement. Under its terms, swap transaction errors "reasonably determined" by the party to constitute less than 5% of errors in an asset class are deemed immaterial under the no-action letter, and thus will not result in DMO referral to the Division of Enforcement.
In general, firms submitting error report notification forms may be eligible for self-reporting credit in an enforcement matter for disclosing swap reporting errors as mandated under CFTC rules. In its February advisory related to self-reporting, the CFTC highlighted that the voluntariness of a self-report is a key consideration in determining the self-reporting credit a firm might receive to reduce its civil monetary penalty.17But within that discussion, and elsewhere, the CFTC clarifies that disclosure otherwise mandated by regulation can still be treated as "voluntary," stating that "a self-report will be eligible for Mitigation Credit even if it may have been required to be disclosed by a regulated entity in its annual CCO report, so long as the report was made in a timely manner notwithstanding the timing of the annual report."18
This change in CFTC enforcement underscores the need for a robust compliance plan and a protocol for evaluating swaps reporting issues as they arise. Under the No-Action Letter, firms will need to quickly ascertain whether trade reporting errors are material – perhaps even prior to determining whether error correction will occur within the seven-day period – to avoid delayed error notification submission. Integrating the approach into existing trade reporting policies, procedures, and supervisory frameworks will better equip a swap market participant to rationally evaluate whether to self-report and further mitigate compliance risk under the new CFTC guidance. For information on leveraging compliance programs to mitigate enforcement risk, see Steptoe’s client alert covering the issue in more detail here.
Future CFTC Action
The No-Action Letter is not time sensitive and will expire only upon the applicable compliance date of any Commission action – including a CFTC rulemaking or Order—addressing the swap data error correction notification obligations under CFTC rules.19
This is a standard statement for many CFTC No-Action Letters. The CFTC has included similar language in the No-Action Letters it previously issued with respect to SEF minimum trading functionality,20 position aggregation requirements,21 reporting obligations under the Ownership and Control Reports final rule,22 and other No-Action Letters issued under both Republican and Democratic administrations.
The creation of a materiality standard is a welcome change for market participants. However, many smaller reporting counterparties, such as unregistered de minimis dealers, will continue to face increased costs and considerable resource allocation to dissect whether error notification is mandated when trade reporting issues arise. Entities affected by the swap data reporting error correction notification requirements who remain dissatisfied with the approach, or with related concerns with the swap reporting requirements, should consider advocating for further relief or guidance.
1 Commodity Futures Trading Comm'n, Press: Release CFTC Staff Issues No-Action Letter Regarding Swap Data Error Correction Notification Requirements (July 31, 2025), https://www.cftc.gov/PressRoom/PressReleases/9103-25.
2 Where "error" is defined, in general, to include circumstances where swap data is not completely and accurately reported. See 17 C.F.R. § 43.3(e)(4)(i) and 17 C.F.R. § 45.14(c)(1) for a complete definition of "error," including circumstantial examples.
3 CFTC No-Action Letter, CFTC Letter No. 25-25 at 1 (July 31, 2025), https://www.cftc.gov/csl/25-25/download.
4 17 C.F.R. § 43.3(a)(1).
5 17 C.F.R. §§ 43.3(e)(1)(ii), 45.14(a)(1)(ii). See also Commodity Futures Trading Comm’n, Swap Data Error Correction Notification Form, https://www.cftc.gov/media/7396/SDECNForm/download.
6 17 C.F.R. §§ 43.3(e)(1)(i), 45.14(a)(1)(i).
7 17 C.F.R. §§ 43.3(e)(1)(ii), 45.14(a)(1)(ii).
9 Supra n.3 at 2; see also Staff Advisory on Reporting of Errors and Omissions in Previously Reported Data, CFTC Letter No. 22-06 (June 10, 2022), https://www.cftc.gov/csl/22-06/download.
11 Id.
12 See id. at 2.
13 Id.
15 Staff Advisory on Materiality or Other Criteria That Operating Divisions Will Use to Determine Referrals to the Division of Enforcement, CFTC Letter No. 25-13 (Apr. 17, 2025), https://www.cftc.gov/csl/25-13/download.
16 Commodity Futures Trading Comm'n, Press Release: CFTC Division of Enforcement to Refocus on Fraud and Helping Victims, Stop Regulation by Enforcement (Feb. 4, 2025) (announcing a reorganization of the Division of Enforcement's task forces to focus on preventing "fraud, manipulation, and abuse" and helping victims "while ending the practice of regulation by enforcement"), https://www.cftc.gov/PressRoom/PressReleases/9044-25.
17 Commodity Futures Trading Comm'n, CFTC Releases Enforcement Advisory on Self-Reporting, Cooperation, and Remediation (Feb. 25, 2025), https://www.cftc.gov/media/11821/EnfAdv_Resolutions022525/download.
18 Id; see also id. at 2 ("This Advisory also clarifies that Mitigation Credit is available for entities that self-report information which they may also have to include in mandatory annual CCO reports . . . .").
19 Supra n.3 at 3.
20 CFTC No-Action Letter, CFTC Letter No. 25-24 at 5 (July 30, 2025), https://www.cftc.gov/csl/25-24/download.
21 CFTC No-Action Letter, CFTC Letter No. 25-21 at 5 (July 18, 2025), https://www.cftc.gov/csl/25-21/download.
22 CFTC No-Action Letter, CFTC Letter No. 24-14 at 3 (Sept. 24, 2024), https://www.cftc.gov/csl/24-14/download.
