April 22, 2014

Commodity Futures Trading Commission (CFTC) Extends Relief from De Minimis Exception to Certain Non-US Affiliates

The Commodity Futures Trading Commission’s Division of Swap Dealer and Intermediary Oversight (DSIO) issued no-action relief to non-US persons that are not guaranteed or conduit affiliates of US persons (Non-Guaranteed Non-US Persons) from counting certain swaps toward the swap dealer (SD) de minimis threshold.In its Cross-Border Interpretive Guidance and Policy Statement, the CFTC stated that Non-Guaranteed Non-US Persons do not need to count swaps with certain persons, including a guaranteed affiliate of a US person that is a swap dealer (Guaranteed SD Affiliate). DSIO’s no-action relief extends this policy by granting relief under circumstances in which a Guaranteed SD Affiliate has crossed the de minimis threshold and is therefore required to register as an SD within two months. 

Pursuant to the no-action relief, a Non-Guaranteed Non-US Person is not required to include, forde minimis calculation purposes, swaps traded with a Guaranteed SD Affiliate during the two-month period after which the Guaranteed SD Affiliate has crossed the de minimis threshold. Such relief is subject to certain conditions, including a requirement that the Guaranteed SD Affiliate represent in writing that the Guaranteed SD Affiliate intends to register as an SD and the date by which it is required to register. A copy of such representation must be sent to DSIO via electronic mail within 48 hours of execution of the swap. 

CFTC Letter No. 13-64 is available here.

©2014 Katten Muchin Rosenman LLP

About the Author

Guy Dempsey Jr., Bank Regulations Attorney, Katten Muchin Law Firm

Guy C. Dempsey Jr. concentrates his practice on derivatives and structured products and on bank regulation. He advises clients on derivatives transactions of all types across all asset classes, as well as on the corporate governance, regulatory, collateral, compliance, insolvency and litigation issues associated with such products.


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