CFTC Staff Letter 13-52 (No-Action): Relief for LCH.Clearnet Ltd to Clear DCM/SEF Swaps

U.S. COMMODITY FUTURES TRADING COMMISSION
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Telephone: (202) 418-5430
Facsimile: (202) 418-5547 aradhakrishnan@cftc.gov a Ananda Radhakrishnan Director Division of Clearing and Risk CFTC Letter No. 13-52 No-Action Division of Clearing and Risk Sullivan & Cromwell LLP 125 Broad Street New York, New York 10004 Re: No-Action Relief with Regard to Clearing Swaps Executed on DCMs or SEFs Dear Mr. Gilberg:
This is in response to your letter dated July 30, 2013 (“Letter”), to the Division of Clearing and Risk (“Division”) of the Commodity Futures Trading Commission (“Commission”). In the Letter you request, on behalf of LCH.Clearnet Ltd (“LCH”), a derivatives clearing organization (“DCO”) registered under Section 5b of the Commodity Exchange Act (“CEA”), 1 that the Division confirm that it will not recommend that the Commission commence an enforcement action against (1) LCH for clearing certain swaps (“DCM/SEF Swaps”) executed on, or subject to the rules of, designated contract markets (“DCMs”) or swap execution facilities (“SEFs”), and (2) clearing members of LCH for clearing DCM/SEF Swaps through LCH. You have requested that this relief be effective until LCH’s existing DCO registration orders are formally amended to permit LCH to clear DCM/SEF Swaps, and you have represented that LCH intends to apply soon for an amended DCO registration order that would permit it to clear DCM/SEF Swaps. Statement of Facts Based upon the representations made by LCH to the Division, including the representations made in the Letter, we understand the relevant facts to be as follows:
LCH was the first non-U.S. clearinghouse to register as a DCO with the Commission, 2 and currently it operates pursuant to two DCO registration orders that were issued in 2001 and