The first in a series of dates implementing mandatory swaps clearing finally arrived last week. March 11, 2013 marked the date by which swap dealers, major swap participants, and private funds active in the swaps market were required to begin clearing swaps. The March 11 deadline applies to certain index credit default swaps, or CDS, and interest rate swaps that were entered into on or after March 11, 2013. This new clearing requirement applies only to newly executed swaps, as well as changes in the ownership of a swap. Non-financial entities using swaps for hedging commercial risk, however, are exempt from clearing. The CFTC has put together a
handy chart laying out the five swap classes required to be cleared along with their deadlines.
Other important dates for swap clearing are fast approaching. Accounts managed by third party investment managers, as well as ERISA pension plans, have until September 9, 2013, to begin clearing swaps entered into on or after that date. All other financial entities are required to clear swaps beginning on June 10, 2013, for swaps entered into on or after that date. With regard to the CDS indices on European corporate names, iTraxx, the following compliance dates apply:
- April 26, 2013, for Category 1 Entities;
- July 25, 2013, for Category 2 Entities; and
- October 23, 2013, for all other entities.
Market participants electing an exception from mandatory clearing under section 2(h)(7) of the Commodities Exchange Act do not have to comply with the reporting requirements for electing the exception until September 9, 2013.