CFTC Staff Issues No-Action Letters

by Katten Muchin Rosenman LLP

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.


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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