CFTC Staff Letter 12-57: Time-Limited No-Action Relief for Swaps on Natural Gas Exchange

U.S. COMMODITY FUTURES TRADING COMMISSION
Three Lafayette Centre
1155 21st Street, NW, Washington, DC 20581
Telephone: (202) 418-5977
Facsimile: (202) 418-5407 gbarnett@cftc.gov
Division of Swap Dealer and
Intermediary Oversight
Gary Barnett
Director
CFTC Letter No. 12-57
No-Action
December 18, 2012
Division of Swap Dealer and Intermediary Oversight Cheryl Graden Chief Legal Counsel Natural Gas Exchange Inc. 10th Floor, 300 – 5th Avenue SW Calgary, Alberta Canada T2P 3C4 Re: Time-Limited No-Action Relief: Request that Swaps Transacted on Natural Gas Exchange Not Be Considered in Calculating Aggregate Gross Notional Amount for Purposes of Swap Dealer De Minimis Exception Dear Ms. Graden:
This letter responds to a request submitted by Natural Gas Exchange Inc. (“NGX”) to the Division of Swap Dealer and Intermediary Oversight (“Division”) of the Commodity Futures Trading Commission (“Commission”) requesting time-limited no-action relief concerning the calculation of the aggregate gross notional amount of swap dealing, as it relates to certain transactions. 1 In relevant part, NGX requested that “contracts traded on NGX [for a limited time period] need not be included within the calculation of the aggregate gross notional amount for purposes of the swap dealer de minimis exception under Commission Rule 1.3(ggg)(4).” Background NGX, located in Calgary, Alberta, Canada, operates an exempt commercial market (“ECM”) that provides electronic trading, central counterparty clearing and data services to the North American natural gas and electricity markets. The products are traded through the IntercontinentalExchange, Inc. (“ICE”) trading platform, pursuant to an Agreement for Services entered into by NGX and ICE. NGX operates an electronic marketplace through which NGX contracting parties may enter into NGX products, which NGX characterizes as (1) forward