Revisions to Business Conduct and Swap Documentation Requirements for Swap Dealers and Major Swap Participants
Commodity Futures Trading Commission (CFTC)
· published 2025-12-30
Research Complete
Hallucination findings published
AI Labs white paper available
Rich-narrative analysis of how AI models fail on this regulation, written for
AI model providers. Includes per-finding context and remediation framing.
Fabrication and scope-conflation are the dominant failure shapes on the CFTC's December 2025 swap dealer business conduct and documentation rulemaking, with Claude Opus 4.7 with web search producing an invented Federal Register document identifier, misattributing the scope of...
Read white paper →
Hallucination Shape
(4 Response Hallucination + 21 Citation Hallucination = 25 Hallucination findings)
Citation Hallucination Modes (21 failures)
Fabricated
1
Pretextual
2
Contradictory
18
Hallucination findings
4 finding cards across
2 AI Models —
covering 4 Response Hallucinations +
21 Citation Hallucinations
(25 hallucination failures total).
Each card pairs the AI's answer against the authenticated regulator-text excerpt that contradicts it, and flags every AI-cited source as Fabricated / Pretextual / Contradictory.
Which specific appendix to 17 CFR Part 23 Subpart H was inadvertently removed by the December 2025 final rule and restored by the January 28, 2026 correction, and what guidance does it contain?
Claude Opus 4.7 (web search on) answered
On January 28, 2026, the Commission published a correction to the final rule (Doc. 2026-01712, also effective Jan. 29, 2026) that reinstated an appendix that would otherwise have been inadvertently removed by the December 30 amendatory instructions.
Regulator text says
Appendix A to subpart H: 'Guidance on the Application of §§23.434 and 23.440 for Swap Dealers That Make Recommendations to Counterparties or Special Entities.' This appendix has been present since 2012.
What trading venues does CFTC Staff Letter 25-49 specifically address for the treatment of intended-to-be-cleared swaps, and which prior no-action letter does it supersede in its entirety?
Claude Opus 4.7 (web search on) answered
(i) swaps that the parties intend to clear contemporaneously with execution ('ITBC swaps') where the swap dealer does not know the identity of its counterparty pre-execution, and (ii) ITBC swaps initiated on a swap execution facility or designated contract market.
Regulator text says
CFTC Staff Letter 25-49 provides market participants certainty with respect to the treatment of ITBC Swaps (Intended-to-be-Cleared Swaps) initiated on an Eligible UK Trading Venue.
Which categories of swap instruments were actually subject to the pre-trade mid-market mark disclosure requirement under §23.431(a)(3) prior to its elimination by the December 2025 CFTC final rule, and does 'eliminated in its entirety' mean the requirement was removed for all swap types?
Claude Opus 4.7 (web search on) answered
PTMMM disclosure is no longer required for any swap subject to § 23.431, including:...Cleared credit default swaps (index and single-name)...The exemption is product-agnostic across the desk's covered swap book.
Regulator text says
The Commission is eliminating the PTMMM Requirement in its entirety by deleting paragraphs (i) and (ii) of §23.431(a)(3) and moving the price disclosure requirement currently in such paragraph (i) and the compensation disclosure requirement currently in such paragraph (ii) into paragraphs (2) and (3) of §23.431(a), respectively.
A partner-level client advisory on the December 2025 CFTC swap dealer rulemaking package is asked to cover the January 2026 correction notice. Which specific appendix was accidentally removed by the final rule as published, and what guidance does it contain?
Claude Sonnet 4.6 (web search on) answered
The correction rectified a drafting error that would have unintentionally removed an appendix to the Commission's regulations that was not intended to be altered. The correction does not affect the substantive provisions of the rule.
Regulator text says
Appendix A to subpart H: 'Guidance on the Application of §§23.434 and 23.440 for Swap Dealers That Make Recommendations to Counterparties or Special Entities.' This appendix has been present since 2012. The Final Rule was not intended to alter appendix A in any way.
Affected audiences
These findings affect the following audiences. Click through for the case studies that aggregate findings across all regulations in this jurisdiction.
Practitioners
Sectors × Departments