swap execution facilities (SEFs)

CFTC Approves Final Rules Relating to DCMs, SEFs and Margin Requirements for Uncleared Swaps

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On December 8, the CFTC approved a number of final rules, including (i) amendments requiring designated contract markets (DCMs) to implement certain risk controls relating to market disruptions caused by electronic trading, (ii) amendments to eliminate certain operational requirements applicable to swap execution facilities (SEFs), and (iii) amendments to the margin requirements for uncleared swaps for swap dealers and major swap participants. DCM Risk Controls Release. SEF Regulations Release. Margin Requirements Release.

CFTC Unanimously Approves Final Rule Amending Swap Execution Facility Requirements

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On November 18, the CFTC unanimously approved a final rule amending certain parts of its regulations relating to the execution of “package transactions” on swap execution facilities (SEFs) and the resolution of error trades on SEFs. The final rule amends part 37 of CFTC regulations to allow the swap components of certain categories of package transactions to be executed on SEF but through flexible means of execution rather than through the required methods of execution for “required transactions.” Release.

CFTC’s Division of Market Oversight Supplements No-Action Relief to SEFs and DCMs from Certain CFTC Regulations for Correction of Errors

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On January 8, the Commodity Futures Trading Commission (CFTC) Division of Market Oversight issued a no-action letter that provides an alternative error correction process by which swap execution facilities (SEFs) and designated contract markets (DCMs) may permit counterparties to determine that an error has occurred and correct the error, subject to ex post facto review by the SEF or DCM. The no-action letter supplements the relief provided in CFTC Letter 17-27, which provided relief from certain CFTC regulations to permit SEFs and DCMs to correct clerical or operational errors discovered after a swap has been cleared. CFTC Release.

U.S. Commodity Futures Trading Commission Divisions Issue Time-Limited No-Action Letter Extending Relief from Certain Recordkeeping Requirements Under Commission Regulations

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On December 8, 2015, the U.S. Commodity Futures Trading Commission’s (the “CFTC”) Division of Swap Dealer and Intermediary Oversight and Division of Market Oversight issued a time-limited no-action letter extending the relief provided in CFTC Letter No. 14-147. The relief would otherwise expire on December 31, 2015 and applies to commodity trading advisors (“CTAs”) that are registered with the CFTC and are members of designated contract markets (“DCMs”) or swap execution facilities (“SEFs”). The extension grants no-action relief to these entities from the requirement to record oral communications, and also to covered market participants from the requirement to link records of oral and written communication that lead to the execution of a transaction in a commodity interest and related cash or forward transactions. Such relief will expire on the effective date of any final CFTC action with respect to the CFTC’s proposal to amend Regulation 1.35(a). Press Release. No-Action Letter.

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

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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.  Release.  No Action Letter #1.   No Action Letter #2.