RegAlert2012-10-12 | CFTC Staff Letter 12-17Added · Updated
CFTC Staff Letter 12-17: Interpretations and No-Action Positions on ECP Status
The Office of General Counsel interprets that each guarantor of a swap must be an Eligible Contract Participant unless the swap is executed on a designated contract market, relief is granted under section 4(c), or the Trade Option Exemption applies. Non-Eligible Contract Participants generally cannot be jointly and severally liable for swap obligations, and cash proceeds from a loan count toward the $10 million total assets threshold for Eligible Contract Participant qualification upon receipt by the borrower. The staff provides no-action relief for certain swap guarantee arrangements, anticipatory Eligible Contract Participants, and specific determinations regarding amounts invested on a discretionary basis, subject to specified conditions.
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U.S. COMMODITY FUTURES TRADING COMMISSION
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Office of General Counsel
CFTC Letter No. 12-17
No-Action and Interpretation
October 12, 2012
Office of General Counsel
Staff Interpretations and No-Action Relief Regarding ECP Status: Swap Guarantee Arrangements; Jointly and Severally Liable Counterparties; Amounts Invested on a Discretionary Basis; and “Anticipatory ECPs”
Section 723(a)(2) of the Dodd-Frank Wall Street Reform and Consumer Protection Act
(“Dodd-Frank Act”) 1 amended section 2(e) of the Commodity Exchange Act (“CEA”) 2 to provide that “it shall be unlawful for any person, other than an [ECP], to enter into a swap unless the swap is entered into on, or subject to the rules of, a board of trade designated as a contract market under section 5.”3 On May 23, 2012, the Commodity Futures Trading Commission (“CFTC” or “Commission”) published jointly with the Securities and Exchange Commission (“SEC,” and together with the CFTC, “Commissions”) final rules further defining, inter alia, the term “eligible contract participant” (“ECP”) and providing interpretations regarding ECP definitional issues. 4 In response to various requests for further clarifications and relief with respect to the application of section 2(e) in various circumstances, 5 the Office of General Counsel (“OGC”) is providing the following interpretations, as further explained in this letter: 6 (I.A) swap guarantors
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Source: Commodity Futures Trading Commission — original document · Summary generated with machine assistance and reviewed before publication; the authoritative text is the regulator's original document. How RegAlert works
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