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Dodd-Frank and what it means for communications

Jun 07, 2019 2 min read

Enacted in 2010 in response to the 2007-08 financial crisis, the Dodd-Frank act introduced a raft of legislation, in fact ‘more than three times as many new restrictions as any other law passed since January 2009′ (Mercatus).

Introducing sweeping requirements applicable to financial institutions it also brought into force stringent recordkeeping requirements for swap dealers and major swap participants.

The legislation requires each swap dealer and participant to keep pre-execution trade information, including a record of all oral and written communications concerning a trade. This could include communications via telephony, fax, online chat, email or any other digital media.

The act requires records to be stored using accurate and reliable timing and store the date time of transactions and communication records down to the nearest minute using Universal Coordinated Time (UTC) to aid in trade reconstruction. Brring stores all records in UTC and maintains accuracy to the second both for auditing and for billing. In addition Dodd-Frank requires that once records are written they should be unalterable to protect against tampering or deletion.

Records are required to be kept at the principal place of business for the dealer or participant. If the principal place of business is outside the US then the act gives dealers and participants 72 hours to provide the records following a request.

Transactional records to do with the trade are to be kept for up to five years following the termination or completion date of a transaction, with ready access to be provided in the first two years of the five year period. Any oral communications via telephony, voicemail, mobile device or other digital or electronic media need to be kept for one year.

Summary

  • Who – Swap dealers and major swap participants (not swap dealers who maintain a substantial position) as well as some unregistered counterparties including private companies, are required to maintain full, complete, and systematic records.
  • What – Records should be complete and should be queryable by participant and transaction.
  • Records should be immutable.
  • Where – Records should be kept at the principal place of business.
  • How long – Firms must keep oral communications archived for one year while transactional records to do with the trade are to be kept for the life of the swap plus five years.

Sources:

https://www.law.cornell.edu/cfr/text/17/23.201#
https://www.ecfr.gov/cgi-bin/text-idx?SID=c7755c91cdd55b9862f33b710bbcd6de&mc=true&node=se17.1.23_1201&rgn=div8
https://www.congress.gov/bill/111th-congress/house-bill/4173

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