CFTC Dec 2025 Announcment

For years, correcting errors on so-called “dead swaps”, trades that expired long ago, has drained compliance resources without meaningfully reducing risk.

In December 2025, the Commodity Futures Trading Commission (CFTC) formally acknowledged this imbalance, issuing No-Action relief that removes the obligation to reconstruct outdated data for long-matured swaps. While this marks a pragmatic shift for historical reporting, it also signals something far more important: the regulator’s expectations for data quality and reconciliation on open swaps have never been higher. By relieving firms of the burden of the past, the CFTC has sharpened its focus on the present thereby making reconciliation of live trades a regulatory non-negotiable.

For compliance teams, the requirement to fix errors on "Dead Swaps,” trades that expired years ago, has long felt like a regulatory treadmill: heavy exertion with no forward movement. The industry, led by ISDA, submitted a formal appeal in September 2025, arguing that forcing firms to build "one-off solutions" to reconstruct old data formats was a "disproportionate" burden that did nothing to reduce current market risk.

The CFTC agreed, and on December 10th, 2025, the regulator issued a No-Action relief, showing that the regulator is prioritizing market stability over bureaucratic perfection.

Ending the Validation Quagmire

The relief addresses a technical impossibility inherent in the previous rules. When the CFTC updates its reporting standards, establishing a "Last Change Date," Swap Data Repositories (SDRs) update their validation logic.

This created a "Catch-22" for firms trying to correct errors on swaps that died years ago. Because the old data formats were often incompatible with new SDR validation parameters, compliance teams were forced to engineer costly "one-off solutions" just to trick the SDR into accepting corrections for trades that no longer carried economic risk. The CFTC’s December guidance acknowledges that this data is unlikely to help monitor current systemic risk.

Pragmatism is Not Permission

However, relief on the past does not mean relaxation on the present. The No-Action letter is highly specific, and a close reading of the text reveals that it effectively raises the stakes for your active trading book.

According to the specific provisions of the relief, while firms are no longer required to reconstruct data for swaps that matured more than two years prior to error discovery, the regulator has drawn a hard line regarding Open Swaps.

For live trades, the guidance adopts the standard explicitly requested by ISDA: errors must be corrected for the "most recently reported data". This is a critical distinction. The regulator may not require you to correct the historical ledger of a trade, but they now demand that the current snapshot of that trade is impeccable.

Furthermore, the "Dead Swap" relief contains significant exceptions. As detailed in the scope for correction, firms are still mandated to fix errors impacting Critical Data Elements, specifically the Legal Entity Identifier (LEI), Unique Transaction Identifier (UTI), and fields listed in Appendix A. The regulator’s message is clear: they will overlook historical noise, but they will not tolerate "ghost trades"—unidentifiable transactions—floating in the database.

The Cautionary Tale

This shift brings us to the recent enforcement action against Citibank, which resulted in a $1.5 million civil penalty. Crucially, this fine was not a response to isolated data discrepancies, but rather a consequence of widespread programming logic errors and systemic reporting failures.

This distinction, between a clerical oversight and a fundamental compliance failure, defines the current danger zone for firms. While the CFTC has granted relief for historical errors on "Dead Swaps" that matured more than two years ago, that relief explicitly excludes Open Swaps. For any trade that remains live, the regulator has codified the standard that the "most recently reported data" must be accurate.

This means that if your reporting engine has flawed logic, similar to the "design flaws" cited in the Citibank order, you remain fully exposed. The No-Action relief allows you to ignore the history of a dead trade, but it provides zero cover for the current state of a live one. By removing the operational distraction of historical clean-ups, the regulator has effectively removed the industry's primary excuse for failing to get the present right.

The Way Forward

The CFTC has effectively removed the operational burden of historical reconstruction. Firms no longer need to burn resources validating trades that died before the rules changed. But as the Citibank fine demonstrates, the regulator has simply shifted its scrutiny from the past to the present.

The strategic move now is to take that freed-up bandwidth and reinvest it into the quality of your Open Swaps. For many firms, this requires moving beyond legacy manual checks or "black box" reporting engines that hide logic errors until it’s too late.

In this environment, forward-thinking institutions are increasingly looking for partners that specialize in diagnostic health checks for transaction reporting. The objective is to identify systemic breaks before the regulator does. Solutions like Qomply’s DualRec are designed specifically for this heightened era of scrutiny, automating the reconciliation of internal books against the SDR to ensure that "most recently reported data" is always accurate, complete, and compliant.

The message from the CFTC is clear: We will be pragmatic about the past, so you can be perfect in the present. It is a high bar, but with the right solutions in place, it is a standard that is well within reach.