April 11, 2021

Volume XI, Number 101

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CFTC Extends Temporary No-Action Relief From Trade Execution Requirement for Certain Affiliated Counterparties

On December 17, the Commodity Futures Trading Commission’s Division of Market Oversight issued CFTC Letter No. 20-45, which extends relief from the trade execution requirement for certain inter-affiliate transactions provided under CFTC Letter No. 17-67 (available here) and prior staff letters. CFTC Letter No. 17-67 provides relief from the trade execution requirement under CFTC Regulation 50.52(a) with regard to swaps that are entered into by eligible affiliate counterparties and cleared, regardless of the affiliates’ ability to claim the inter-affiliate clearing exemption under CFTC Regulation 50.52(b). The no-action relief was set to expire on December 31.

On December 7, the CFTC approved a final rule that established two exemptions from the trade execution requirement (Final Rule). Importantly, the Final Rule codifies the no-action relief provided under CFTC Letter No. 17-67. Upon the effective date of the Final Rule, further no-action relief will be unnecessary. However, the Final Rule will not become effective until 30 days after publication in the Federal Register, the date of which is currently uncertain. CFTC Letter No. 20-45 extends the current no-action relief until the effective date of the Final Rule.

CFTC Letter No. 20-45 is available here.

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©2021 Katten Muchin Rosenman LLPNational Law Review, Volume X, Number 353
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About this Author

Kevin M. Foley, Finance Lawyer, Katten Llaw Firm
Partner

Kevin M. Foley has extensive experience in commodities law and advises a wide range of clients, both in the United States and abroad, on compliance with the Commodity Exchange Act and the rules of the Commodity Futures Trading Commission (CFTC) affecting traditional exchange-traded products, as well as the over-the-counter markets involving swaps and other derivative instruments. His clients include futures commission merchants, derivatives clearing organizations, designated contract markets, foreign boards of trade and an industry trade association.

...

312-902-5372
Stanley V. Polit, Katten Muchin, Financial Services lawyer, Corporate Regulatory Matters Attorney
Associate

Stanley Polit concentrates his practice in transactional, corporate and regulatory aspects of financial services matters. Stan is able to provide legal services to a wide variety of clients including proprietary trading firms, hedge funds, broker-dealers, registered investment advisers, commodity trading advisers, financial institutions and general corporate clients.

Prior to joining Katten, Stan served as a council member for a national crisis management firm, where he specialized in crisis communication and merged media strategies. He has...

312.902.5420
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