CFTC Staff Letter 23-12 (No-Action): Extension of time-limited no-action position for Taiwan Futures Exchange with regard to Section 5b(a) of the Commodity Exchange Act and Commission regulations thereunder

CFTC LETTER NO. 23-12 NO-ACTION SEPTEMBER 11, 2023 U.S. COMMODITY FUTURES TRADING COMMISSION Three Lafayette Centre 1155 21st Street, NW, Washington, DC 20581 Telephone: (202) 418-5000 www.cftc.gov Division of Clearing and Risk September 11, 2023 Mr. Tzu-Hsin Wu Chairman Taiwan Futures Exchange Corporation 14F, No. 100, Sec. 2, Roosevelt Rd. Zhongzheng Dist., Taipei City 100404 Taiwan Re: No-Action Letter with Regard to Section 5b(a) of the Commodity Exchange Act and Commission Regulations Thereunder Dear Mr. Wu:
This is in regard to CFTC Letter No. 22-12,1 which expires on September 15, 2023. In the letter, the Division of Clearing and Risk (“Division”) of the Commodity Futures Trading Commission (“Commission”) stated that it will not recommend that the Commission take enforcement action against Taiwan Futures Exchange Corporation (“TAIFEX”) 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”) and Commission regulations thereunder, subject to certain conditions described in the letter. Under the terms of the letter, TAIFEX is permitted to clear certain swaps for the proprietary trades of TAIFEX clearing members that are U.S. persons or affiliates of U.S. persons while its application for exemption from DCO registration is pending. TAIFEX has submitted to the Commission an application for exemption from the requirement to register as a DCO, pursuant to Commission Regulation 39.6.2 The Division is reviewing TAIFEX’s petition and has not yet made a recommendation to the Commission as to whether or not TAIFEX should be granted an exemption. Before the Commission grants an exemption from DCO registration, the requirements and conditions in Commission Regulation 39.6(a) and (b) must be satisfied. Regulation 39.6(a)(2) requires that a memorandum of understanding (“MOU”) or similar arrangement satisfactory to the Commission is in effect 1 CFTC Letter No. 22-12 (September 15, 2022). 2 17 C.F.R. § 39.6.