CFTC Issues Temporary No-Action Relief For Non-Clearing Swap Dealers


[authors: LexBlog, Maureen C. Guilfoile, Ross Pazzol, and Blake J. Brockway]

On July 17, the CFTC’s Division of Market Oversight granted non-clearing member swap dealers temporary no-action relief from the larger swap trader reporting requirements for physical commodities indentified in CFTC Regulation 20.4. Regulation 20.4 requires daily reports from clearing members and swap dealers. Under the large trader reporting rule, swap dealers that are not clearing members are required to comply with Part 20, including the daily reporting requirements proscribed by Regulation 20.4, by the effective date for the CFTC’s final regulations providing a further definition for the term swap dealer (July 23). The no-action relief indicates that the CFTC will not recommend an enforcement action against non-clearing member swap dealers for failure to submit Section 20.4 reports until 60 days after the swap dealer registration application date, which is defined as the effective date of the further definition of the term swap.

The CFTC provided an additional six months of no-action relief for non-clearing member swap dealers that satisfy the conditions for Regulation 20.10(e), provided that the swap dealer files a notice with the CFTC that describes: (i) resource limitations or lack of experience in reporting transactions that cause it to be unable to submit fully compliant Regulation 20.4 reports; (ii) arrangements that are being made to submit fully compliant reports; and (iii) the anticipated date of full compliance with the Part 20 requirements. Regulation 20.10(e) grants the CFTC discretion to extend the compliance date based on resource limitations or lack of experience reporting transactions for a swap dealer that is not an affiliate of a bank holding company, is not a registered FCM or broker-dealer or affiliate of an FCM or broker-dealer, and is not supervised by any Federal prudential regulator.

The no-action letter is available here.


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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