CFTC Issues Temporary No-Action Relief for Trade Options


[authors: Kenneth M. Rosenzweig, Blake J. Brockway]

On August 14, the Commodity Future Trading Commission’s Division of Market Oversight (DMO) granted market participants temporary no-action relief from certain regulatory requirements for trade options, as defined in CFTC Regulation 32.3(a). On April 27, the Commission published final rules for commodity options, which included an interim final rule that applies to trade options. This interim final rule specified that trade options would be subject to certain CFTC regulations, including swap data recordkeeping requirements, large trader reporting, position limits, duties of swap dealers (SDs) and major swap participants (MSPs), reporting and recordkeeping requirements for SDs and MSPs, capital and margin requirements for SDs and MSPs, and the prohibition against fraud, manipulation and other abusive practices and related enforcement provisions.

The Division of Market Oversight’s no-action letter grants relief for trade options from all of the regulatory requirements listed above, except for those related to position limits, the prohibitions of fraud, manipulation and other abusive practices, and related enforcement provisions. The no-action relief will remain in effect until the earlier of: (i) December 31, 2012; or (ii) the effective date of a final trade option rule or interpretive order issued by the CFTC.

The no-action letter is available here.


Topics:  CFTC, Major Swap Participants, Recordkeeping Requirements, Swap Dealers, Trade Options

Published In: Administrative Agency Updates, Finance & Banking Updates, Securities Updates

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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