CFTC Staff Letter 15-55: Extension of No-Action Relief for Certain Package Transactions

U.S. COMMODITY FUTURES TRADING COMMISSION
Three Lafayette Centre
1155 21st Street, NW, Washington, DC 20581
Telephone: (202) 418-5000
Facsimile: (202) 418-5521 www.cftc.gov
CFTC Letter No. 15-55
No-Action
October 14, 2015
Division of Market Oversight
Extension of No-Action Relief from the Commodity Exchange Act Sections 2(h)(8) and 5(d)(9) and from Commission Regulation § 37.9 and No-Action Relief for Swap Execution Facilities from Commission Regulation § 37.3(a)(2) for Swaps Executed as Part of Certain Package Transactions The Division of Market Oversight (DMO) of the Commodity Futures Trading Commission (“Commission”) herein extends existing no-action relief from requirements in sections 2(h)(8) and 5(d)(9) of Commodity Exchange Act (“CEA” or the “Act”) and from requirements in Commission Regulations § 37.3(a)(2) and § 37.9 for swaps executed as part of certain package transactions. By way of background, section 2(h)(8) of the Act (the “trade execution requirement”) requires that transactions involving swaps subject to the CEA section 2(h)(1) clearing requirement be executed on a designated contract market (“DCM”) or swap execution facility (“SEF”), unless no DCM or SEF makes such swap available to trade or such swap transactions qualify for the clearing exception under CEA section 2(h)(7).1 The Commission adopted rules in parts 37 and 38 of its regulations that specify procedures for DCMs and SEFs to make a swap available to trade (“MAT”), and thus subject to the trade execution requirement.2 On a SEF, such swaps must be executed on either (1) an Order Book, as defined in § 37.3(a)(3); or (2) a Request for Quote System, as defined in § 37.9(a)(3), that operates in conjunction with an Order Book.3 On a DCM, such swaps must be executed pursuant to subpart J of part 38 of the Commission’s regulations,4 which implements DCM Core Principle 9 under section 5(d)(9) of the CEA.5