CFTC No-Action Letter 00-108: U.K. Electronic Trading Platform for Physical Commodity Swaps

00-108
CFTC Letter No. 00-108
December 4, 2000
No-Action
Division of Trading & Markets
Re: Electronic Trading Platform
Dear :
This is in response to your letter dated September 27, 2000, to the Division of Trading and Markets (the "Division") of the Commodity Futures Trading Commission (the "Commission"), on behalf of your client, (the "Company"), as supplemented by additional correspondence and telephone conversations. In your letter of September 27, 2000, you seek confirmation that the Division will not recommend that the Commission authorize or commence enforcement action under the Commodity Exchange Act, 7 U.S.
C. § 1 et seq. (1994) (the "Act"), or the regulations thereunder,1
in connection with: (i) the operation by the Company of an electronic platform for the trading of certain agreements (the "Platform"), (ii) any such agreements executed through the Platform, or (iii) any participants in such transactions. Trading through the Platform began on May 24, 2000, but U.S. persons have not been permitted to participate, pending the issuance of a no-action letter by the Division. Facts Based upon the representations made by and on behalf of the Company in written correspondence and telephone conversations with Commission staff, we understand the facts to be as follows:
The Company is engaged in the telephone brokering of over-the-counter ("OTC") derivative instruments on various physical commodities including crude oil, refined oil products, electricity, metals and natural gas. The Company is a wholly owned indirect subsidiary of "U", one of the largest securities, commodities, and derivatives brokers in the United Kingdom.2 The Company was formed in 1990 under the laws of the U.K., it is authorized under U.K. law as an "arranger" for OTC derivatives transactions, and its principal place of business is located in London.3 You have represented that all persons who hold a 10%-or-greater interest in the Company, all members of the Board of Directors of the Company ("Board Members"), all officers of the Company, and all employees of the Company and its affiliates who are significant to the development or operation of the file:///S|/Website%20Management/LegacyDataCopyasof2010-04-21/tm/letters/00letters/tm00-108.htm (1 of 13) [5/6/2010 6:22:07 PM]