CFTC Staff Letter 22-07 (No-Action): Extension of time-limited no-action relief for Shanghai Clearing House with regard to Section 5b(a) of the Commodity Exchange Act and Commission Regulations thereunder

CFTC LETTER NO. 22-07 NO-ACTION JULY 25, 2022

Mr. Hongbo Wang
Deputy General Manager
Shanghai Clearing House
No. 2 East Beijing Road
Huangpu District
Shanghai, People’s Republic of China
Re: Extension of No-Action Relief with Regard to Section 5b(a) of the Commodity Exchange Act and Commission Regulations Thereunder Dear Mr. Wang:
By letter dated May 31, 2016 (CFTC Letter No. 16-56), the Division of Clearing and Risk (“Division”) of the Commodity Futures Trading Commission (“Commission”) first provided relief to Shanghai Clearing House (“SHCH”), stating that the Division would not recommend that the Commission take enforcement action against SHCH for failure to register as a derivatives clearing organization (“DCO”) pursuant to the requirements of Section 5b(a) of the Commodity Exchange Act (the “CEA”) 1 and Commission regulations thereunder, subject to certain conditions described in the letter. 2 The relief was set to expire on July 31, 2022. The Division is hereby extending the relief for up to one additional year, for the reasons discussed below. Under the terms of the relief, SHCH is permitted to clear swaps 3 for the proprietary accounts 4 of SHCH clearing members that are U.S. persons or affiliates of U.S. persons. The 1 7 U.S.C. § 7a-1(a) (DCO registration requirement). 2 CFTC Letter No. 16-56 granted relief until May 31, 2017. The relief subsequently was extended until November 30, 2017, by CFTC Letter No. 17-26 (May 16, 2017), until February 28, 2018, by CFTC Letter No. 17-62 (November 20, 2017), until February 28, 2019, by CFTC Letter No. 18-04 (February 22, 2018), until July 31, 2021, by CFTC Letter No. 18-18 (July 31, 2018), and until July 31, 2022, by CFTC Letter No. 20-46 (Dec. 17, 2020). 3 CFTC Letter No. 16-56 permitted SHCH to clear certain swaps subject to mandatory clearing in the People’s Republic of China, subject to the restrictions included therein. CFTC Letter U.S. COMMODITY FUTURES TRADING COMMISSION Three Lafayette Centre 1155 21st Street, NW, Washington, DC 20581 Telephone: (202) 418-5000 www.cft c.gov Division of Clearing and Risk