CFTC Staff Letter 17-58: No-Action Relief for European Stability Mechanism from Swap Clearing Requirement

U.S. COMMODITY FUTURES TRADING COMMISSION
Three Lafayette Centre
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Division of Clearing and
Risk

CFTC Letter No. 17-58
No-Action
November 7, 2017
Division of Clearing and Risk
Edward Ivey
Linklaters LLP
1385 Avenue of the Americas
New York, NY 10105
Re: No-Action Relief for the European Stability Mechanism from the Swap Clearing Requirement in Section 2(h)(1) of the Commodity Exchange Act and Commodity Futures Trading Commission Regulations 50.2 and 50.4 Dear Mr. Ivey:
On July 10, 2017, you sent a letter on behalf of the European Stability Mechanism (“ESM”) (“Request Letter”), to the Division of Clearing and Risk (“Division”) of the Commodity Futures Trading Commission (“Commission”) requesting relief from the swap clearing requirement of section 2(h)(1) of the Commodity Exchange Act (“CEA”) (“Clearing Requirement”). Based on the facts described in the Request Letter, the Division has decided to not recommend that the Commission take enforcement action against ESM for failure to comply with the Clearing Requirement as implemented by Commission regulations 50.2 and 50.4.1 The Division believes that granting this no-action relief to ESM would be consistent with the final Federal Register release adopting the end-user exception to the Clearing Requirement (“End￾User Exception”), 2 in which the Commission determined that foreign governments, foreign central banks, and certain international financial institutions should not be subject to the Clearing Requirement. 3