CFTC Staff Letter 22-15: Extension of No-Action Positions for MAT/Futures Package Transactions

CFTC LETTER NO. 22-15 NO-ACTION NOVEMBER 09, 2022 U.S. COMMODITY FUTURES TRADING COMMISSION Three Lafayette Centre 1155 21st Street, NW, Washington, DC 20581 Telephone: (202) 418-5000 Division of Vincent McGonagle Market Oversight Director Re: Extension of No-Action Positions from Sections 2(h)(8) and 5(d)(9) of the Commodity Exchange Act and from Commission Regulations 37.3(a)(2) and 37.9 for Swaps Executed as Part of Certain Package Transactions The Division of Market Oversight (“Division” or “DMO”) of the Commodity Futures Trading Commission (“CFTC” or “Commission”) is extending the remaining no-action positions, 1 as set forth in CFTC Letter No. 20-31, regarding requirements in sections 2(h)(8) and 5(d)(9) of the Commodity Exchange Act (“CEA” or “Act”) and regarding requirements in Commission regulations 37.3(a)(2) and 37.9 for swaps executed as part of certain package transactions.2 The Division is extending its no-action positions for those package transactions where at least one individual swap component is made available to trade (“MAT”) and therefore subject to the CEA section 2(h)(8) trade execution requirement, and all other components are contracts for the purchase or sale of a commodity for future delivery, i.e., futures contracts (“MAT/Futures Package Transactions”). 1 This letter responds to a request received from International Swaps and Derivatives Association (“ISDA”) that the Division extend the remaining no-action positions under CFTC Letter No. 20-31. See ISDA Letter, Re:
Request for Relief from the Requirement to Execute Certain Package Transactions on a Swap Execution Facility Pursuant to CEA Section 2(h)(8), CEA Section 5(d)(9), and CFTC Rules 37.9 and 37.3(a)(2) (Oct. 3,
2022) (“ISDA Letter”).
2 The Division previously took no-action positions regarding certain package transactions in CFTC Letter Nos. 14-12, 14-62, 14-137, 15-55, 16-76, 17-55, and 20-31. For purposes of the no-action positions taken in this letter, a “package transaction” is a transaction involving two or more instruments: (1) that is executed between two or more counterparties; (2) that is priced or quoted as one economic transaction with simultaneous or near simultaneous execution of all components; (3) that has at least one component that is a swap that is made available to trade and therefore is subject to the CEA section 2(h)(8) trade execution requirement; and (4) where the execution of each component is contingent upon the execution of all other components.