Commodity Futures Trading Commission staff recently released three no-action letters providing relief relating to swap data reporting requirements with respect to trade options, inter-affiliate swaps and real-time reporting for financial and non-financial entities.
Trade Options by End-Users: In CFTC Letter No. 13-08, the Division of Market Oversight (DMO) granted no-action relief from certain reporting and recordkeeping requirements under the trade option exemption provided by CFTC Regulation 32.3 to entities that are not swap dealers or major swap participants (Non-SD/MSP). A Non-SD/MSP relying on this exemption must comply with all other trade option requirements and satisfy additional conditions, including the requirement that the Non-SD/MSP (i) report the commodity option transaction on Form TO (for relief from reporting requirements) and (ii) obtain a legal entity identifier (LEI) and provide such LEI to its swap dealer or major swap participant counterparty (for relief from recordkeeping requirements). CFTC Letter No. 13-08 is available here.
Inter-affiliate Swaps: In CFTC Letter 13-09, DMO and the Division of Clearing and Risk issued no-action relief from certain swap reporting requirements with respect to swaps entered into between affiliates of certain wholly or majority-owned market participants. In particular, swaps entered into between wholly owned affiliates are not required to be reported; swaps entered into between majority-owned affiliates (or between a wholly owned and a majority-owned affiliate) may be reported on a quarterly, as opposed to a trade-by-trade, basis. In order to be eligible for such relief, market participants must satisfy several conditions. For example, an affiliated swap counterparty must not be a swap dealer or major swap participant, or be affiliated with such entities. This relief does not apply to swaps executed on a swap execution facility or designated contract market (DCM) or to swaps that are subject to mandatory clearing. Letter 13-09 also provides relief with respect to historical swaps between affiliates, which are exempt from all reporting requirements, provided the swaps were not executed on a DCM or submitted for clearing. Letter 13-09 is available here.
Swap Data Reporting Requirements for Non-SD/MSPs: In CFTC Letter 13-10, DMO issued time-limited no-action relief from certain swap data reporting requirements to swap counterparties that are Non-SD/MSPs. As adopted, CFTC rules would have required Non-SD/MSPs to fully comply with the swap data reporting rules by April 10. Letter 13-10 provides relief under Parts 43 and 45 of the CFTC’s regulations with respect to interest rate and credit swaps for Non-SD/MSPs that are not “financial entities,” as defined in Section 2(h)(7)(C)(i) of the Commodity Exchange Act (Non-Financial Swap Counterparties) until July 1. With respect to equity, foreign exchange and other commodity swaps, DMO granted relief to Non-SD/MSPs that are financial entities (Financial Swap Counterparties) until May 29 and to Non-Financial Swap Counterparties until August 19. Relief under Part 46 was granted for all swap asset classes until September 30 for Financial Swap Counterparties and October 31 for Non-Financial Swap Counterparties. A person relying on this relief must report all relevant swap transaction data that would have been required to be reported but for the no-action relief within one month after the end of any applicable relief period under this no-action letter. Letter 13-10 is available here.
Topics: CFTC, End-Users, Major Swap Participants, No-Action Letters, Recordkeeping Requirements, Reporting Requirements, Swap Dealers, Swaps, Trade Options
Published In: General Business Updates, Finance & Banking Updates, Securities Updates