CFTC Extends Relief for SEFs From Certain Block Trade Requirements
On November 13, the Commodity Futures Trading Commission’s Division of Market Oversight (DMO) issued CFTC Staff Letter No. 20-35, which extends temporary no-action relief to swap execution facilities (SEFs) and other market participants originally provided by CFTC Staff Letter No. 17-60. (For additional information regarding CFTC Staff Letter No. 17-60, please refer to the November 17, 2017 edition of Corporate & Financial Weekly Digest.) Staff Letter No. 17-60 provided that DMO would not recommend enforcement action against a SEF that has rules and/or procedures that use the SEF’s non-order book trading systems or platforms to facilitate the execution of block trades for swaps that are intended-to-be-cleared, and thus are not compliant with CFTC Regulation 43.2, subject to certain conditions being met.
The relief provided by CFTC Staff Letter No. 20-35 will expire on the compliance date of the Part 43 Real-time Public Reporting Requirements final rule, which codified the relief provided in CFTC Staff Letter No. 17-60 by amending the definition of “block trade” to allow block trades for intended-to-be-cleared swap blocks to be executed on a SEF’s non-order book trading systems or platforms.
CFTC Staff Letter No. 20-35 is available here.