CFTC Extends No-Action Relief Between Certain Inter-affiliate Swaps

The Division of Clearing and Risk (DCR) responded to letter from the International Swaps and Derivatives Association, Inc. (ISDA) from November requesting extensions of CFTC exemption from the swap clearing requirement for inter-affiliate swaps and extension of no-action relief letters by the Commission.

The Division of Market Oversight (DMO) responded to the ISDA request for extension of no-action relief for inter-affiliate swap trading that are not exempt from Clearing Under CFTC regulations.

The DCR letter exempts these entities from mandatory clearing requirements and extends the no-action relief for affiliated counter-parties operating in outside of the U.S. The previous no action relief was modify by the DCR to allow counterparites outside U.S Jurisdictions to rely on alternative compliance.

“DCR’s letter today combines and modifies the relief provided in CFTC Letters 16-81 and 16-84 to include affiliated counterparties located in Canada, Hong Kong, and Switzerland that seek to rely on CFTC regulation 50.52(b)(4)(ii). The letter extends relief until the earlier of (i) December 31, 2020, or (ii) the date on which amendments to CFTC regulation 50.52 take effect. This extension will continue to allow market participants to comply with the inter-affiliate exemption as they have done since the exemption was adopted by the CFTC in 2013.”

The DMO extended no-action relief for inner affiliated swaps that satisfy regulation 50.52 and not subject to trade execution requirements by the Commodity Exchange Act.

“DMO’s CFTC Letter 16-80 provided temporary relief from the trade execution requirement to affiliate counterparties that satisfy CFTC regulation 50.52(a) but do not satisfy CFTC regulations 50.52(b), (c) or (d) and are not exempt from clearing. DMO’s letter today extends that relief until the earlier of (i) December 31, 2020 or (ii) the effective date of Commission action providing a permanent solution for the execution of inter-affiliate swaps. During this period of relief, DMO will continue to evaluate whether applying the trade execution requirement to such inter-affiliate swap transactions would promote pre-trade price transparency in the swaps market.”


Last Updated: December 14, 2017

The full press release can be found here.

Each respective letter reply can be found bellow:

Letter No. 17-66

Re: No-Action Relief from Certain Provisions of the Outward Facing Swaps Condition in the Inter-Affiliate Exemption from the Clearing Requirement

Letter No. 17-67

Re: Extension of No-Action Relief from Commodity Exchange Act Section 2(h)(8) for Swaps Executed Between Certain Affiliated Entities that Are Not Exempt from Clearing Under Commission Regulation 50.52

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