On June 4, 2013, the Division of Clearing and Risk (the “Division”) of the US Commodity Futures Trading Commission (the “CFTC”) granted limited no-action relief from the mandatory clearing requirement for swaps entered into by certain treasury affiliates within non-financial corporate groups (the “No-Action Relief”). The relief will permit eligible treasury affiliates that are not otherwise eligible for the end-user exception to continue to enter into non-cleared hedging transactions for the benefit of their non-financial affiliates, but is subject to certain conditions and limitations.

Background: CFTC Mandatory Clearing Requirement and the End-User Exception -

Title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”) provides for the mandatory clearing of OTC derivatives contracts designated by the CFTC. Nonetheless, in recognition of the significant cost and operational challenge that clearing could represent for end-users, Dodd-Frank contains an exception from the clearing requirement available to non-financial (i.e., commercial) end-users that use swaps to hedge or mitigate commercial risk and that elect not to clear such swaps and satisfy certain reporting requirements (the “End-User Exception”).

Also, the CFTC has exempted from the mandatory clearing requirement by rule swaps between certain affiliated entities within a corporate group as an alternative to the End-User Exception.