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CFTC Open Access to Markets & Relief in Swap-Dealer Agreements

CFTC Opens Access to Indian Futures Market for US Customers

On May 17, the Commodity Futures Trading Commission issued an order to the National Stock Exchange of India (NSE) through its Part 30 exemptive program, which affords regulatory deference to foreign regulatory frameworks and provides US customers greater access to certain foreign futures markets. The order allows NSE’s members to directly accept US customer funds to trade in futures and options contracts on NSE without such members being required to register as futures commission merchants with the CFTC, based on substituted compliance with applicable Indian law and the rules of the NSE. The relief is based upon a determination by the CFTC that the local laws and regulations in India relevant to NSE members establish a regulatory framework that is generally comparable to that imposed under the Commodity Exchange Act and CFTC regulations for transactions on US markets. In the event of any material changes to its local laws and regulations, NSE is required to promptly notify the CFTC.

The order will be published in the Federal Register and the relief is effective with respect to each foreign firm upon its filing of certain representations with the National Futures Association (NFA). The CFTC release, together with a link to the order, is available here.

CFTC Grants Relief to Certain Non-US Persons in Determining Swap Dealer and Major Swap Participant Status

On May 16, the Commodity Futures Trading Commission’s Division of Swap Dealer and Intermediary Oversight (DSIO) provided no-action relief for certain non-US persons from counting swaps with international financial institutions, such as the International Monetary Fund, that are incorporated or based in the United States in determining swap dealer and major swap participant status as specified by the CFTC’s definitions.

The Interpretive Guidance and Policy Statement Regarding Compliance with Certain Swap Regulations, issued by the CFTC in 2013, generally requires a non-US person to count swap activity with US person counterparties in determining whether it meets the criteria for swap dealer or major swap participant registration. To the extent an international financial institution is incorporated in the United States, or has its principal place of business in the United States, it could be deemed a US person with respect to the above-mentioned guidance. However, DSIO’s position in the no-action letter indicates that it would not recommend enforcement action against a non-US person that is neither a guaranteed affiliate nor a conduit affiliate of a US person if it excludes swaps entered into with international financial institution counterparties in determining whether it is a swap dealer or a major swap participant. The rationale for relief expressed in the no-action letter also would logically support relief for US persons from having to count swaps with international financial institutions, but the letter does not address that situation.

The no-action letter is available here.


©2019 Katten Muchin Rosenman LLP


About this Author

Ayah Sultan, Katten Law Firm, Financial Services Attorney

Ayah Sultan is an associate in the Financial Services practice. 

While in law school, Ayah served as an editor of the Harvard Business Law Review, a member of the Harvard Law Entrepreneurship Project and a board member of the Women's Law Association.

Guy Dempsey Jr., Bank Regulations Legal Specialist, Katten Muchin

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.

Much of Guy’s work involves helping bank and non-bank clients analyze the details and impact of the Dodd-Frank Act. He maintains deep knowledge of the banking laws and regulations relating to capital markets activities.