CFTC Issues Staff Interpretation on Financial Reporting for Japanese Nonbank Swap Dealers

The Commodity Futures Trading Commission's (CFTC) Market Participants Division has issued a staff interpretation regarding financial reporting obligations for nonbank swap dealers regulated by the Financial Services Agency of Japan. The clarification addresses provisions established under a comparability determination and related comparability order issued by the Commission on July 18, 2024. The Japanese Comparability Order granted substituted compliance to Japanese nonbank swap dealers regarding the CFTC’s capital and financial reporting requirements, subject to specific operational conditions. Under Condition 9 of the order, Japanese nonbank swap dealers are required to submit a copy of their home regulator Annual Business Report to both the CFTC and the National Futures Association (NFA). The newly issued staff interpretation clarifies that firms may fulfill this requirement by providing certain enumerated schedules of the Annual Business Report, referred to as In Scope Schedules. The CFTC confirmed that the submission of these In Scope Schedules must still adhere to Condition 9 rules regarding translation, U.S. dollar currency conversion, and filing deadlines. The staff interpretation was released in response to a request submitted by the Securities Industry and Financial Markets Association (SIFMA) on behalf of its member institutions relying on the substituted compliance framework.