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CFTC says derivatives traders must start obtaining ID tags by year-end
By Neil Roland ( October 11, 2012, 19:16 GMT | Insight) -- Washington – U.S. banks that trade certain derivatives must obtain identification tags by December 31, the U.S. Commodity Futures Trading Commission said, setting in motion a schedule that puts the United States at least months ahead of global regulators in allocating identifiers.
The 20-digit tags, called legal entity identifiers or LEIs, seek to help regulators monitor banks’ exposure to derivative risk in the wake of the collapse of the Lehman Brothers brokerage in 2008.
In a series of questions and answers about the start of swap data reporting published Wednesday, the CFTC said that banks as well as energy and agriculture companies that qualify as swap dealers must obtain an LEI by the end of the year to report credit and interest-rate derivative trades.
All dealers that trade at least $8 billion a year as of October will have to report the transactions to swap data repositories, or warehouses, the commission said (see here).
The December 31 deadline is also the date by which dealers must register with the CFTC, subjecting them to heightened margin, reporting and conflict-of-interest standards.
The next deadline for obtaining LEIs is March 31, 2013. That date applies to dealers who make equity, foreign exchange and other derivative trades, the CFTC said.
The final deadline applies to derivative traders who don’t have enough volume to qualify as dealers. They must obtain LEIs by April 10, 2013, the commission said.
- DTCC allotment -
Derivative traders will have to obtain the LEIs from a clearing and settlement firm that has been designated by the CFTC to handle the U.S. identifier program, the only one in the world at this point.
About 26,000 LEIs have been allotted already by the firm, the Depository Trust & Clearing Corporation, and its partner, the Society for Worldwide Interbank Financial Telecommunication, said DTCC spokeswoman Judith Inosanto.
New York-based DTCC expects to ultimately distribute between 40,000 and 50,000 tags, she said....
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