CFTC Staff Letter 19-22: Revised No-Action Position for Uncleared Swaps with the European Stability Mechanism

CFTC Letter No. 19-22 No-Action October 16, 2019

U.S. COMMODITY FUTURES TRADING COMMISSION
Three Lafayette Centre
1155 21st Street, NW, Washington, DC 20581
Telephone: (202) 418-5000
Division of Swap Dealer and
Intermediary Oversight
Joshua B. Sterling
Director
Re: Commission Regulations 23.150-159, 23.161: Revised No-Action Position with Respect to Uncleared Swaps with the European Stability Mechanism Ladies and Gentlemen:
Pursuant to CFTC Staff No-Action Letter 17-34, 1 the Division of Swap Dealer and Intermediary Oversight (“DSIO”) of the Commodity Futures Trading Commission (“Commission”) provided a position of no-action stating that DSIO would not recommend an enforcement action against a swap dealer (“SD”) that is registered with the Commission and subject to the Commission’s uncleared swap margin requirements 2 that does not comply with such requirements solely in respect of uncleared swaps between such SD and the European Stability Mechanism (the “ESM”). On October 16, 2019, the Commission approved a proposal to exclude ESM from the definition of “financial end user” in Commission regulation 23.151, which would have the effect of excluding swaps between certain SDs and ESM from the Commission’s uncleared swap margin requirements, rendering the DSIO no-action position under CFTC No-Action Letter 17-34 moot. Accordingly, this letter modifies the DSIO no￾action position under CFTC No-Action Letter 17-34 to provide that such position will expire on the sooner of the effective date of final Commission action on its proposal or 180 days from the date of this letter. DSIO believes that, absent direction from the Commission to the contrary, if the Commission has not acted on its proposal within 180