June 18, 2019

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CFTC Extends Time-Limited No-Action Relief for Entities Submitting Swaps for Clearing With Certain DCOs

On February 20, the Commodity Futures Trading Commission’s Division of Market Oversight (DMO) published Staff Letter 18-03, which extends the time-limited no-action relief provided in Staff Letter 16-85 for entities submitting swaps for clearing by derivatives clearing organizations (DCOs) operating under (1) exemptive orders issued by the CFTC; or (2) no-action relief granted by the CFTC’s Division of Clearing and Risk (Relief DCOs). (For a complete discussion of the relief provided by Staff Letter 16-85, please refer to the January 6, 2017 edition of Corporate & Financial Weekly Digest).

The relief provided by Staff Letter 16-85 expired on January 31. Subject to certain terms and conditions, the Staff Letter extends such time-limited no-action relief in two areas. First, market participants that are not acting as a DCO or central counterparty, but are a counterparty to a swap cleared by a Relief DCO (Relief DCO Counterparty) will be relieved from certain reporting obligations, including, but not limited to, the obligation to report swap continuation data for alpha swaps that have been accepted for clearing by a Relief DCO. Relief from these reporting obligations will expire on the earlier of: (a) February 19, 2021; (b) the effective date of any CFTC regulation altering the reporting obligations of any entities with respect to the reporting of “Relief DCO Original Swaps” or “Relief DCO Clearing Swaps” (as such terms are defined in the Staff Letter); or (c) the revocation or expiration of the exemptive order or no-action letter issued to the relevant Relief DCO. Second, DMO will not recommend enforcement action against entities reporting swaps, which, at the time they are executed, are intended by the counterparties to be cleared by a Relief DCO pursuant to Parts 43 and 45 of the CFTC’s regulations (Relief ITBC Swaps). Such relief will continue until the earlier of: (a) February 19, 2021; (b) the effective date of any CFTC regulation altering or amending the “Clearing indicator” or “Clearing venue” PET data fields in Part 45 of the CFTC’s regulations, or the “Cleared or Uncleared” data field in Part 43 of the CFTC’s regulations; or (c) the revocation or expiration of the exemptive order or no-action letter issued to the relevant Relief DCO.

Staff Letter 18-03 is available here.

©2019 Katten Muchin Rosenman LLP


About this Author

Stanley V. Polit, Katten Muchin, Financial Services lawyer, Corporate Regulatory Matters Attorney

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...

Kevin M. Foley, Finance Lawyer, Katten Llaw Firm

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.

Kevin has served as counsel to the Futures Industry Association (FIA) for more than 20 years. In 2012 he was recognized for his exemplary efforts on behalf of the association and the industry, in particular for his guidance in navigating the challenges confronting FIA member firms in complying with the Dodd-Frank Wall Street Reform and Consumer Protection Act.