CFTC Staff Letter 13-63: Time-Limited No-Action Relief for LatAm SEF, LLC from SEF Registration Requirements

U.S. COMMODITY FUTURES TRADING COMMISSION
Three Lafayette Centre
1155 21st Street, NW, Washington, DC 20581
Telephone: (202) 418-5260
Facsimile: (202) 418-5527
Division of
Market Oversight
CFTC Letter No. 13-63
No-Action
October 17, 2013
Division of Market Oversight
Mr. Stephen Dunn
Chief Executive Officer
LatAm SEF, LLC
115 Broadway, Suite 1302
New York, NY 10006
Re: Time-Limited No-Action Relief for LatAm SEF, LLC from the Registration Requirements of Section 5h(a)(1) of the Commodity Exchange Act and Commission Regulation 37.3(a)(1) Dear Mr. Dunn:
This is in response to your letter dated October 2, 2013, (“Letter”) to the Division of Market Oversight (“DMO”) of the Commodity Futures Trading Commission (“Commission” or “CFTC”). In the Letter, you request, on behalf of LatAm SEF, LLC (“LatAm”), that DMO not recommend that the Commission take enforcement action against LatAm for failure to register as a swap execution facility (“SEF”), or against any market participants for use of, or other relationships with, LatAm. 1 Specifically, LatAm requests that DMO confirm it will not recommend to the Commission that it commence an enforcement action against LatAm for violation of Section 5h(a)(1) of the Commodity Exchange Act (the “Act”) 2 or Commission Regulation 37.3(a)(1), 3 or against any other market participant that uses or has other relationships with LatAm, based on LatAm’s failure to register as a SEF.

1
17 CFR part 37.
2
Section 5h(a)(1) of the Act provides that “No person may operate a facility for the trading or processing of swaps
unless the facility is registered as a swap execution facility or as a designated contract market under this section.” 7 U.S.C. § 7b-3. 3 Commission Regulation 37.3(a)(1) provides that “Any person operating a facility that offers a trading system or platform in which more than one market participant has the ability to execute or trade swaps with more than one other market participant on the system or platform shall register the facility as a swap execution facility under this
part or as a designated contract market under part 38 of this chapter.” 17 CFR 37.3(a)(1).

2
LatAm currently operates a U.S.-based multilateral trading platform which brings together multiple third-party buying and selling interests in Mexican Peso interest rate swaps. On September 25, 2013, LatAm submitted to the Commission, pursuant to Commission Regulation 37.3(b), an application for SEF registration. As part of that application, LatAm requested a grant of temporary SEF registration pursuant to Commission Regulation 37.3(c). In its Letter, LatAm represented that its SEF application for temporary registration was complete. In addition, LatAm represented that it would, as a condition of any relief (1) comply with all of the substantive requirements applicable to SEFs under the Act and the Commission’s regulations; and (2) comply with any CFTC staff-issued guidance and no-action relief applicable to SEFs issued on or after September 26, 2013. Given LatAm’s pending SEF application and its representations regarding conditions of relief, DMO will not recommend that the Commission take enforcement action against LatAm for failure to register as a SEF under Section 5h(a)(1) of the Act or Commission Regulation 37.3(a)(1), or against any market participants for use of, or other relationships with, LatAm, based on LatAm’s failure to register as a SEF. This no-action relief shall commence on October 17, 2013 and shall expire upon the earlier of: (1) the date that the Commission grants or denies temporary SEF registration to LatAm, or (2) November 19, 2013 at 12:01 am EST. This letter, and the no-action position taken herein, represents the views of DMO only, and does not necessarily represent the positions or views of the Commission or of any other division or office of the Commission’s staff. The no-action positions taken herein do not excuse LatAm from compliance with any other applicable requirements of the Act or the Commission’s regulations thereunder. As with all no-action letters, DMO retains the authority to condition further, modify, suspend, terminate or otherwise restrict the terms of the no-action relief provided herein, in its discretion. Nothing in this letter presupposes the merits of LatAm’s SEF application. That application is pending DMO review and subject to requests for additional information and/or changes. If you have any questions concerning this correspondence, please contact David Van Wagner, Chief Counsel, Division of Market Oversight, at (202) 418-5481 or dvanwagner@cftc.gov, or Nancy Markowitz, Deputy Director, Division of Market Oversight, at (202) 418-5453 or nmarkowitz@cftc.gov. Sincerely, Vincent McGonagle Director Division of Market Oversight