Sungard's Daniel Parker looks at how to capitalise on the pre-trade rules coming out of Dodd-Frank
The Dodd-Frank Act (DFA) final rules require extensive
systematic changes to pre-trade swap documentation and the
adoption of comprehensive external business conduct processes
– as early as October 14, 2012.
External business conduct compliance and
Among other provisions, external business conduct compliance
constitutes (i) standard format disclosure; (ii) suitability
monitoring; and. (iii) reasonable basis analysis. The rules
apply to swap dealings with all counterparties, including an
enhanced duty to "special entities."
It is therefore critical that an external business conduct
data system design consider all applicable variations of trade
participation status with applicable exemptions, including the
codification of prescribed safe harbors.
For instance, according the CFTC and SEC, major swap
participants (MSPs) are not subject to institutional
suitability, Know Your Counterparty (KYC), and scenario
analysis requirements – but those in a fiduciary
capacity are. An enterprise system should consider varied
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