RegAlert2013-03-18 | CFTC Staff Letter 13-01Added · Updated
CFTC Staff Letter 13-01: No-Action Relief from Required Clearing for Swaps Resulting from Multilateral Portfolio Compression Exercises
The Division of Clearing and Risk will not recommend enforcement action against market participants for failing to clear amended or replacement swaps generated during multilateral portfolio compression exercises, provided five specific conditions are met. The relief applies only to original swaps that were not required to be cleared at the time of execution and excludes any swaps already cleared by a derivatives clearing organization. The compression exercise must involve more than two participants, follow established service provider rules, and result in swaps with the same counterparties and material terms as the originals, entered into solely to reduce risk.
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U.S. COMMODITY FUTURES TRADING COMMISSION
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Facsimile: (202) 418-5547 aradhakrishnan@cftc.gov a Ananda Radhakrishnan Director Division of Clearing and Risk CFTC Letter No. 13-01 No-Action March 18, 2013 Division of Clearing and Risk Re: No-Action Relief from Required Clearing for Swaps Resulting from Multilateral Portfolio Compression Exercises Dear Ladies and Gentlemen:
This letter is in response to a request dated February 19, 2013, from TriOptima, an entity that offers multilateral portfolio compression services, 1 to the Division of Clearing and Risk (Division) of the Commodity Futures Trading Commission (Commission), in which TriOptima requested relief on behalf of swap market participants that participate in multilateral portfolio compression exercises in the form of confirmation from Division staff that the clearing requirement under section 2(h)(1)(A) of the Commodity Exchange Act (CEA) and part 50 of Commission regulations does not apply to (1) swaps that are amended in order to reduce notional value as part of a multilateral portfolio compression exercise and (2) new swaps that are entered into to replace the original swaps as a result of a multilateral portfolio compression exercise in order to reduce notional exposures or aggregate outstanding gross notional exposure. The request focuses on swaps that were executed prior to the date on which the counterparties must begin complying with the clearing requirement (and therefore, not required to be cleared), 2 but
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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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