CFTC Staff Letter 20-13: Extended No-Action Relief for European Stability Mechanism from Swap Clearing Requirement

CFTC Letter No. 20-13 No-Action April 14, 2020 Division of Clearing and Risk M. Clark Hutchison III Director Re: Extension of 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 Ladies and Gentlemen:
The Division of Clearing and Risk (“Division”) of the Commodity Futures Trading Commission (“CFTC” or “Commission”) is extending the relief provided by CFTC Letter No. 19-23 1 to the European Stability Mechanism (“ESM”). The relief provided by this letter supersedes relief provided to ESM under CFTC Letter No. 19-23, which modified previously granted relief. On November 7, 2017, the Division published CFTC Letter No. 17-58 2 explaining that the Division would not recommend that the Commission take enforcement action against ESM for failure to comply with the Commission’s clearing requirement under section 2(h)(1) of the Commodity Exchange Act (“CEA”) as implemented by Commission regulations 50.2 and 50.4 (“Clearing Requirement”). 3 On October 16, 2019, the Division published CFTC Letter No. 19- 23 to revise its earlier relief granted to ESM by including an expiration date. CFTC Letter No. 19-23 states that the Division will not recommend that the Commission take enforcement action against the ESM for failure to comply with the Clearing Requirement, until the earlier of: (i) April 14, 2020, at 11:59 pm (Eastern Time); or (ii) the effective date of final Commission action applicable to swaps entered into by ESM that would otherwise be subject to the Commission’s Clearing Requirement. According to its terms, the relief available under CFTC Letter No. 19-23 will expire on April 15, 2020. In this letter, the Division is extending the relief under CFTC Letter No. 19-23 until the earlier of: (i) September 30, 2020, at 11:59 pm (Eastern Time); or (ii) the effective date of final Commission action applicable to swaps entered into by ESM that would otherwise be subject to the Commission’s Clearing Requirement.