CFTC Staff Letter 14-136: Extension of No-Action Relief from Trade Execution Requirement for Inter-Affiliate Swaps

U.S. COMMODITY FUTURES TRADING COMMISSION
Three Lafayette Centre
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Division of
Market Oversight
CFTC Letter 14-136
November 7, 2014
No-Action
Division of Market Oversight
Re: Extension of Time-Limited No-Action Relief from Commodity Exchange Act Section 2(h)(8) for Swaps Executed Between Certain Affiliated Entities that Are Not Exempt from Clearing Under Commission Regulation 50.52 Dear Mr. O’Connor:
This letter responds to a request received from the International Swaps and Derivatives Association, Inc. (“ISDA”) that the Commodity Futures Trading Commission (the “Commission” or “CFTC”) extend the relief provided in CFTC Letter No. 14-26. That letter provides no-action relief from the trade execution requirement of Commodity Exchange Act (“CEA”) section 2(h)(8) to eligible affiliate counterparties, as defined in § 50.52(a) of the Commission’s regulations. 1 The no-action relief will expire on 11:59 p.m. (Eastern Time) December 31, 2014. Background Title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) 2 amended the CEA to establish a comprehensive new regulatory framework for swaps. Among other things, CEA section 2(h)(8) requires that transactions involving swaps subject to the CEA section 2(h)(1) clearing requirement be executed on or pursuant to the rules of a designated contract market (“DCM”) or swap execution facility (“SEF”), unless no DCM or SEF makes such swaps available to trade or such swaps qualify for the clearing exception under CEA
section 2(h)(7) (the “trade execution requirement”).
Swaps subject to the trade execution requirement must be executed in accordance with the execution methods described in § 37.9(a)(2) of the Commission’s regulations.