October 27, 2020

Volume X, Number 301

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October 27, 2020

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October 26, 2020

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CFTC Staff Provides No-Action Relief to Registrant from SEF Reinstatement Requirements

On September 15, the Commodity Futures Trading Commission’s (CFTC) Division of Market Oversight (DMO) granted no-action relief to Tassat Derivatives LLC, a CFTC-registered swap execution facility (SEF), from SEF reinstatement requirements under CFTC Regulation 37.3(d). The no-action relief set out in CFTC Letter No. 20-27 is subject to certain conditions.

On November 6, 2019, the CFTC issued a transfer order approving the transfer of trueEX LLC’s SEF registration to Tassat. In addition to the SEF registration, Tassat acquired all work product related to the development of a physically-deliverable Bitcoin swap contract. Since the transfer, Tassat has been operational and in compliance with all relevant provisions of the Commodity Exchange Act (CEA) and CFTC regulations pertaining to SEFs. However, since the issuance of the transfer order, Tassat encountered internal and external delays impacting the listing of its Bitcoin swap contract. On August 1, pursuant to CFTC Regulation 40.1 (f), Tassat was deemed dormant because it had no trading for a period of 12 consecutive months and was required to seek reinstatement of its SEF registration in order to continue to operate.

Tassat requested relief from the reinstatement requirements to enable it to list its contract for trading prior to a CFTC decision on reinstatement of its registration. The temporary no-action relief will end when the CFTC determines Tassat’s application for reinstatement. Tassat agreed to file its reinstatement application with the CFTC no later than one month from the date of issuance of the relief and also agreed to continue to comply with all applicable provisions of the CEA and CFTC regulatory requirements.

Under the no-action relief, DMO will not recommend the CFTC commence an enforcement action against Tassat for failing to reinstate its SEF registration prior to listing its certified Bitcoin swap contract, or against any Tassat participant who trades the contract upon such listing.

A copy of the CFTC’s release with a link to the CFTC Letter No. 20-27 is available here.

©2020 Katten Muchin Rosenman LLPNational Law Review, Volume X, Number 262
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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.

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Adam Haft is an associate in the Financial Services practice.

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