U.S. Commodity Futures Trading Commission Division of Clearing and Risk Issues No-Action Relief from Swap Clearing Requirements

On January 8, 2016, the U.S. Commodity Futures Trading Commission’s (the “CFTC”) Division of Clearing and Risk issued no-action relief to certain entities from the swap clearing requirements so long as certain conditions (outlined in the respective letters) are complied with. The covered entities include (1) small bank holding companies and savings and loan holding companies with consolidated assets of less than $10 billion and (2) Community Development Financial Institutions that have been certified by the U.S. Department of the Treasury. Press Release. No-Action letter. No-Action Letter.

 

CFTC Approves Final Rule on Margin Requirements for Uncleared Swaps for Swap Dealers and Major Swap Participants

On December 16, 2015, the U.S. Commodity Futures Trading Commission approved a new regulation for uncleared swaps not regulated by the Federal Reserve Board, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, the Farm Credit Administration or the Federal Housing Finance Agency.  The new rule requires parties to collect margin in order to address concerns of entities taking on excessive risk. Press release.

CFTC Divisions Provide Time-Limited No-Action Relief for Certain Affiliated Counterparties

On November 17, 2015, the U.S. Commodity Futures Trading Commission’s Divisions of Clearing and Risk and Market Oversight each renewed preexisting no-relief for specified types of inter-affiliate transactions. The Division of Clearing and Risk addressed situations connected to mandatory clearing regimes outside of the United States. The Division of Market Oversight delayed the application of the trade execution requirement to certain affiliate counterparties.  Release.

CFTC Issues Guidance for Swap Execution Facilities on the Calculation of Projected Operating Costs

On April 23, the CFTC issued guidance regarding the calculation of projected operating costs or expenses for the purpose of meeting the financial resource requirements under SEF Core Principle 13 in Section 5h(13) of the Commodity Exchange Act and Commission Regulation 37.1303.  ReleaseCFTC Letter.

CFTC Provides Relief in Connection with Erroneous Swap Trades and Swap Trade Confirmations

On April 22, the CFTC issued two no action letters providing relief intended to support the development of swap execution facilities (SEFs) and the trading of swaps on SEFs and designated contract markets (DCMs).  The first no action letter provides relief to SEFs and DCMs from regulations to allow for the correction of trades voided as a result of clerical or operational errors or errors discovered after a trade has been cleared.  The second no action letter provides relief to SEFs from certain requirements concerning trade confirmations required from SEFs for non-cleared swaps.  ReleaseNo Action Letter #1.   No Action Letter #2.

CFTC Solicits Public Comment on Swaps-Related Rulemakings in Response to U.S. District Court Order

On March 10, the CFTC issued a request for comment in response to an order issued by the U.S. District Court for the District of Columbia in the matter Securities Industry and Financial Markets Association, et al. v. United States Commodity Futures Trading Commission remanding eight swaps-related rulemakings to the CFTC to address what the court held to be inadequacies in the CFTC’s explanation of its consideration of costs and benefits in those rulemakings, in particular in connection with cross-border activities.  Comments must be received on or before May 11, 2015.  ReleaseRequest for Comment.


 

CFTC Reopens Comment Periods

On February 24, the CFTC submitted for publication in the Federal Register a notice reopening the comment periods for the two Position Limit rulemakings, in anticipation of questions and comments that may arise from the Commission’s Energy and Environmental Markets Advisory Committee meeting.  Release.

CFTC Issues No-Action Relief to Certain Introducing Brokers

On January 23, 2015 the CFTC Division of Swap Dealer and Intermediary Oversight issued no-action relief to certain introducing brokers (IBs) with respect to net capital and financial reporting requirements under Commission Regulations 1.10 and 1.17, respectively.  The conditioned relief permits foreign-domiciled IBs to file audited and unaudited form 1-FR-IBs, as applicable, using local accounting principles in effect where the IB is domiciled in lieu of U.S. Generally Accepted Accounting Principles or International Financial Reporting Standards. In addition, eligible foreign-domiciled IBs will not be required to apply certain foreign currency capital charges under Regulation 1.17 and staff guidance.  Release.

CFTC Provides Relief from the Clearing Requirement for Swaps Entered into by Eligible Treasury Affiliates

On November 26, CFTC issued a no-action letter providing additional relief for eligible treasury affiliates that enter into swaps that are subject to the clearing requirement in section 2(h)(1) of the Commodity Exchange Act (CEA) and part 50 of the CFTC’s regulations. The no-action letter modifies relief that was previously issued for treasury affiliates on June 4, 2013 in CFTC No-Action Letter 13-22. “Eligible treasury affiliates” are entities that are wholly-owned by a non-financial parent company, and are “financial entities” under section 2(h)(7)(C)(i)(VIII) of the CEA because of the activities undertaken on behalf of its non-financial affiliates. Among other changes, the no-action letter modifies the rules placed upon operations between a treasury affiliate and its affiliates and removes restrictions as to the number of financial affiliates that may be within a corporate group.  Release.  Letter.