The U.S. Commodity Futures Trading Commission (CFTC) adopted a final rule on
December 18, 2025, aimed at simplifying long-standing business conduct and documentation
requirements for swap dealers (SDs) and major swap participants (MSPs). The rule
amends 17 CFR Part 23, which governs external business conduct standards and swap
trading relationship documentation, with the objective of reducing unnecessary regulatory
complexity while improving legal certainty for market participants.
For more than a decade, firms relied on a patchwork of temporary CFTC staff no-action
letters to comply with requirements under Subpart H (Business Conduct Standards) and
Subpart I (Swap Trading Relationship Documentation). The finalized rule formally
incorporates that relief into the Commission’s regulations, eliminating duplicative obligations
and lowering compliance costs without weakening customer protections.
The amendments directly affect provisions such as § 23.431, covering pre-trade disclosures
including mid-market mark disclosures and scenario analysis notices, and § 23.504, which
establishes swap trading relationship documentation requirements. Under the new
framework, these requirements no longer apply in full to certain transactions, including swaps
intended to be cleared contemporaneously with execution and those executed under qualifying prime brokerage arrangements—areas where firms had previously relied on
informal staff guidance.
The rule also codifies relief previously granted through multiple no-action letters, replacing
temporary and repeatedly extended guidance with permanent regulatory text. In addition, the
amendments bring the CFTC’s framework into closer alignment with comparable rules
enforced by the Securities and Exchange Commission (SEC) and the Municipal Securities
Rulemaking Board (MSRB), making compliance more efficient for firms operating across
multiple U.S. regulatory regimes.
Separately, the Commission issued a related no-action letter addressing certain UK-based
trading facilities, updating prior staff positions in light of the finalized rule and reinforcing
the CFTC’s cross-border regulatory approach.
Source:
U.S. Commodity Futures Trading Commission
Press Release No. 9157-25 — December 18, 2025
https://www.cftc.gov/PressRoom/PressReleases/9157-25
I appreciate the focus on helping regional banks specifically. Often, the advice out there is geared towards larger institutions and doesn’t address the specific constraints and opportunities that regional banks face. I think exploring strategies like M&A to achieve operational scale and offset regulatory compliance costs is critical for these banks.