CFTC Issues No-Action Relief for Banks, Brokers, Advisors…

The U.S. Commodity Futures Trading Commission issued a range of no-action letters today. The letters provide temporary relief for certain introducing brokers (IBs) commodity trading advisors, and banks owned by non-U.S. swaps dealers.

CFTC No-Action for IBs and CTAs

From the CFTC’s statement:

The Division of Swap Dealer and Intermediary Oversight (DSIO) of the Commodity Futures Trading Commission announced today in a letter that it is taking a no-action position which provides relief from the requirement to register as an introducing broker (IB) or commodity trading advisor for certain affiliates of a swap dealer or swap counterparty that is within thede minimis exception to the swap dealer definition. The relief also extends to the affiliates’ employees where the employees engage in certain activity in support of and on behalf of the swap dealer or swap counterparty. The relief is subject to a number of conditions, including that the affiliates and the swap dealer or swap counterparty undertake to be jointly and severally liable for violations of the CEA or the Commission’s regulations with respect to the relevant activity, and that the affiliates and employees are not subject to a statutory disqualification.

Additionally, DSIO announced its interpretation of an existing rule. The interpretation states that an employee of a swap counterparty that is within the de minimis exception to the swap dealer definition who engages in certain activity on behalf of its employer in connection with the employer entering into a swap would not be considered by DSIO to be an IB.

CFTC No-Action for Banks Owned by non-U.S. Swaps Dealers

From the CFTC statement:

The no-action letter states that the Division will not recommend that the Commission take enforcement action against any U.S. bank that is wholly owned by a foreign entity for failure to consider the swap dealing activities of its foreign affiliates, or the U.S. branches of such affiliates, with respect to swap positions executed from and after October 12, 2012, when determining whether such U.S. bank satisfies the de minimis exception to the swap dealer definition and registration requirements, so long as the U.S. bank meets certain conditions specified in the letter.

CFTC No-Action for “Certain Associated Persons”

From the CFTC Statement:

DSIO stated that, subject to certain conditions, it would not recommend that the Commission commence an enforcement action against any person for failure to register as an AP of a futures commission merchant, introducing broker, commodity pool operator, or commodity trading advisor where the requirement to register as an AP is solely because of the person’s involvement with swaps or as a result of the transition of certain contracts on the Intercontinental Exchange, Inc. and the New York Mercantile Exchange to clearing as commodity futures and options transactions.

The relief is temporary and subject to certain conditions, including the filing of an application for registration as an AP on or before March 31, 2013.

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