The Commodity Futures Trading Commission issued a final rule today outlining the requirements for swap dealers and participants to provide real-time swap transaction, volume, and pricing information to the public.

The rule, which is intended to promote transparency and to enhance price discovery while protecting the anonymity of market participants, goes into effect on March 9.

The final rule spells out the two different scenarios when dealers and participants are considered to have met the real-time swap reporting requirements of the rule.

First, dealers and participants are considered to have fulfilled their reporting requirements if the swaps are completed via a swap execution facility or a designated contract market.

If the swaps are executed outside a swap execution facility or a designated contract market, the transaction should be reported to a registered entity who will then assume the responsibility to publicly disseminate the information.

The rule further adds that registered swap data repositories or third-party service providers that accept swap transactions and pricing data from multiple data sources and have the capability to publicly share the information in real time, can act as real-time disseminators for dealers and participants.

Under the Title VII Dodd-Frank provision, the technical language used by the Act will place all swaps activities under the jurisdiction of the CFTC, including interest rate, currency, equity, credit, and other commodities. The swaps covered by the rule include cleared and uncleared swaps without regard to the method of execution, whether the swaps are cleared on an execution facility, designated contract market, or through bilateral negotiation.

The Commission also adopted the definition of “publicly reportable swap transaction” in the final rule. The term seeks to clarify that any executed swap between two parties that results in a transfer of market risk position between the two must be reported. The term, however, provides exemptions to the reporting requirement on:

-          Transaction where there is no price discovery benefits to share the information

-          Swap that takes place between two wholly-owned subsidiaries of the same parent company and without risking credit exposure to the other party

The Act requires that swap transaction and pricing data be reported as soon as is technologically practical. The CFTC further defines the term to mean as soon as possible, taking into consideration the prevalence, implementation, and use of technology by comparable market participants.

The 85-page regulation also outlines the compliance dates for the real-time reporting requirements as follows:

Compliance date 1: on which exchanges, swap dealers, and market participants must begin compliance on interest rate and credit swaps, is the latter of (a) July 16, 2012, or (b) 60 days after publication of definitions to clarify the terms “swap,” “swap dealer,” and “major swap participant” by the Commission.

The second compliance date on which such entities and counter-parties must begin compliance on equity swaps, foreign exchange transactions, and other commodity swaps, is 90 calendar days after compliance date 1.

Compliance date 3 is the date on which non-swap dealer/market participant counter-parties must begin compliance with respect to swaps in all asset classes, is 90 calendar days after the second compliance date.