CFTC Staff Letter 25-49: Extension of No-Action Position for Intended-to-be-Cleared Swaps on Eligible UK Trading Venues

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A. Relevant SD and MSP Regulatory Obligations
Business Conduct Standards
The Commission’s business conduct requirements for swap dealers (“SDs”) and major swap participants (“MSPs”) 5 under subpart H of part 23 of the Commission’s regulations, which set forth business conduct standards for SDs and MSPs in their dealings with counterparties (the “External BCS”), 6 require SDs and MSPs to provide or obtain specific information from their counterparties, to obtain specific representations in writing from their counterparties, and to perform certain due diligence inquiries with respect to their counterparties prior to entering into (or in some cases, offering to enter into) a swap with such counterparties. 7 Certain safe harbors under the External BCS permit SDs and MSPs to rely on written representations from their counterparties and standardized disclosures, each of which may require amendments or supplements to an SD’s or an MSP’s relationship documentation with such counterparties, prior to entering into a swap with such counterparties. 8 In addition to the safe harbors, many of the External BCS do not apply either (i) when the SD or MSP does not know the identity of the counterparty to a swap prior to the execution of the swap, or (ii) when the swap is initiated on a swap execution facility (“SEF”) 9 or designated contract market (“DCM”), and the SD or MSP does not know the identity of the counterparty to a swap prior to the execution of the swap. 10 5 There are currently no MSPs registered with the Commission; however, because MSPs are subject to regulatory requirements relevant to this letter, MPD is including MSPs within the scope of this letter. 6 17 CFR 23.400–23.451. See generally Business Conduct Standards for SDs and MSPs with Counterparties, 77 FR 9734 (Feb. 17, 2012). 7 Commission regulation 23.402(b), 17 CFR 23.402(b) (requiring SDs to obtain essential facts about their counterparty prior to execution of a transaction); 23.430(a), 17 CFR 23.430(a) (requiring SDs and MSPs to verify that a counterparty meets the eligibility standards for an eligible contract participant before offering to enter into or entering into a swap with such counterparty); 23.431(a), 17 CFR 23.431(a) (requiring SDs and MSPs to provide material information concerning a swap to certain types of counterparties at a reasonably sufficient time prior to entering into the swap); 23.431(b), 17 CFR 23.431(b) (requiring SDs to provide notice to certain types of counterparties that they can request and consult on the design of a scenario analysis; this requirement will be amended as of the effective date of the Final Rule); 23.431(d), 17 CFR 23.431(d) (requiring SDs and MSPs to provide notice to certain types of counterparties of the right to receive the daily mark from a DCO for cleared swaps); 23.432, 17 CFR 23.432 (requiring SDs and MSPs to provide notice to certain types of counterparties of the right to select clearing and the DCO on which a swap is to be cleared); 23.434, 17 CFR 23.434 (requiring SDs, which recommend a swap to certain
types of counterparties, to have a reasonable basis to believe that the swap is suitable for the counterparty); 23.440, 17 CFR 23.440 (requiring SDs that act as an advisor to a Special Entity, as defined in Commission regulation 23.401, 17 CFR 23.401, to act in such entity’s best interest when the SD is recommending a swap tailored to the needs of the Special Entity or a trading strategy involving such a swap); 23.450, 17 CFR 23.450 (requiring SDs and MSPs to inquire into the knowledge and status of a representative of a counterparty that is a Special Entity); and 23.451, 17 CFR 23.451 (prohibiting SDs from entering into swaps with governmental Special Entities if it has made political contributions to an official of such entity). 8 Commission regulations 23.402(d), (e), and (f), 17 CFR 23.402(d), (e), and (f). 9 “Swap execution facility” is defined in section 1a(50) of the CEA, 7 U.S.C. § 1a(50), and Commission regulation 1.3, 17 CFR 1.3. For purposes of this letter, “SEF” means a swap execution facility as defined in Commission regulation 1.3 and registered with the Commission as such. 10 Commission regulations 23.402(b) and (c), 17 CFR 23.402(b) and (c) (requiring SDs and MSPs, as applicable, to obtain and retain certain information only about each counterparty whose identity is known to the SD or MSP prior to the execution of the transaction); 23.430(e), 17 CFR 23.430(e) (not requiring SDs and MSPs to verify

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Swap Trading Relationship Documentation
In addition, documentation standards for SDs and MSPs have been adopted by the Commission pursuant to sections 4s(i)(1) and 4s(h) of the CEA. 11 Specifically, Commission regulation 23.504 requires that an SD or MSP execute swap trading relationship documentation, meeting the requirements of the rule with a counterparty, prior to or contemporaneously with entering into a swap transaction with such counterparty (“STRD Requirement”). 12 Similar to the External BCS, Commission regulation 23.504 contains an exception to the requirement that an SD or MSP execute swap trading relationship documentation with a counterparty prior to or contemporaneously with entering into a swap transaction with such counterparty. The exception in Commission regulation 23.504(a)(1) states that such documentation is not required with respect to swaps executed on a DCM or anonymously on a SEF if such swaps are cleared by a DCO and all terms of the swaps conform to the rules of the DCO and Commission regulation 39.12(b)(6). 13 B. Letter 13-70 In 2013, swap market participants submitted requests to the Division of Swap Dealer and Intermediary Oversight (“DSIO”) (now MPD) to issue a no-action letter with respect to the External BCS and certain documentation requirements under Commission regulation 23.504 as applied to swaps of a type accepted for clearing by a DCO and executed with the intention to be cleared on a DCO contemporaneously with execution. The market participants argued that for cleared swaps, especially those executed on a SEF or DCM:
(1) There is no ongoing relationship between the SD and its counterparty so there is no need for the onboarding information or representations under Commission regulation 23.402, nor swap trading relationship documentation, even if the SD knows the identity of its counterparty prior to execution; (2) Such swaps are sufficiently standardized, and information about such swaps is available from sources other than an SD, such that there should be no need for the SD to make counterparty eligibility when a transaction is initiated on a DCM, or on a SEF when the SD or MSP does not know the identity of the counterparty prior to execution); 23.431(c), 17 CFR 23.431(c) (not requiring disclosure of material information about a swap, if initiated on a DCM or SEF and the SD or MSP does not know the identity of the counterparty prior to execution (contra general prohibition of fraudulent, deceptive, or manipulative practices under Commission regulation 23.410, 17 CFR 23.410)); 23.450(h), 17 CFR 23.450(h) (not requiring SDs and MSPs to have a reasonable basis to believe that a Special Entity has a qualified, independent representative, if the transaction with the Special Entity is initiated on a DCM or SEF and the SD or MSP does not know the identity of the Special Entity prior to execution); and 23.451(b)(2)(iii), 17 CFR 23.451(b)(2)(iii) (not applying the prohibition on entering into swaps with a governmental Special Entity within two years after any contribution to an official of such governmental Special Entity, if the swap is initiated on a DCM or SEF and the SD does not know the identity of the entity prior to execution). 11 7 U.S.C. § 6s(i)(1) and (h). 12 Commission regulation 23.504(a)(2), 17 CFR 23.504(a)(2). 13 17 CFR 39.12(b)(6). The exception in Commission regulation 23.504(a)(1) will be amended to expand the exception to include ITBC Swaps as defined in the Final Rule as of the effective date of the Final Rule.

ITBC Swaps – Eligible UK Trading Venues
4 disclosures of material risks and characteristics, no concerns about institutional suitability determinations, and no concerns about SDs acting as advisors or counterparties to Special Entities; (3) Because both parties to the swaps intend the swaps to be cleared and to face the DCO for the life of the swaps, there is no regulatory purpose to be served by the notices required of SDs regarding the right to clear the swaps, the right to receive a daily mark from the DCO, or the right to select the DCO; and (4) When such swaps are executed anonymously, there should be no concerns about political contributions by SDs to governmental Special Entities in return for swap business. Market participants argued that SDs’ compliance with these External BCS was creating roadblocks to efficient use of cleared swaps, especially for asset managers seeking to execute large trades anonymously with the intention of allocating parts of the trades to multiple accounts post-clearing. In response to the requests, DSIO issued Letter 13-70. In Letter 13-70, DSIO took a no-action position with respect to a list of External BCS requirements and the STRD Requirement under Commission regulation 23.504, with respect to swaps that were intended to be submitted for clearing contemporaneously with execution, commonly known as “intended-to-be-cleared swaps.” The staff’s no-action position in Letter 13-70 was subject to certain conditions, contingent on certain aspects of the swap, including whether or not the SD or MSP knows the identity of the counterparty prior to execution of the swap, whether or not the swap is executed on or subject to the rules of a SEF or DCM, and whether or not the swap was, as of the date of issuance of Letter 13-70 (i.e., November 15, 2013), of a type accepted for clearing by a DCO or subject to a mandatory clearing determination by the Commission.
C. Exempt SEFs and Exempt DCOs
Exempt SEFs
Section 5h(g) of the CEA authorizes the Commission to exempt, conditionally or unconditionally,
a swap execution facility from registration, if the Commission finds that the facility is “subject to comparable, comprehensive supervision and regulation on a consolidated basis by … the appropriate governmental authorities in the home country of the facility.” After the issuance of Letter 13-70, the Commission issued exemptions from swap execution facility registration to

ITBC Swaps – Eligible UK Trading Venues
5 facilities for the trading or processing of swaps 14 from the European Union (“EU”), 15 Singapore, 16 and Japan. 17 Further, in response to the withdrawal of the United Kingdom (“UK”) from the EU, commonly referred to as “Brexit,” CFTC staff issued a no-action letter for certain UK MTFs and OTFs to maintain the status quo of the EU Exemptive Order while the Commission works on a determination for UK authorized MTFs and OTFs under section 5h(g) of the CEA. 18 Any facilities for the trading or processing of swaps that, as of any date of determination, are exempt from registration as a swap execution facility under section 5h(g) of the CEA, including, without limitation, any Exempt EU Trading Venues, Exempt SG Trading Venues, or Exempt Japan Trading Venues, or is an Eligible UK Trading Venue, is an “Exempt SEF” on such date for purposes of the discussion of Letter 23-01 below. 14 Information related to the exemption of foreign swap trading facilities from swap execution facility registration is available at https://www.cftc.gov/International/ForeignMarketsandProducts/ExemptSEFs. 15 On December 8, 2017, the Commission issued an Order of Exemption with respect to multilateral trading facilities (“MTFs”) and organised trading facilities (“OTFs”) authorized in the EU (the “EU Exemptive Order”). See EU Exemptive Order, as most recently amended by the Third Amendment to Appendix A to Order of Exemption (October 26, 2022), available at https://www.cftc.gov/media/7896/EuropeanUnionThirdAmendmentAppendixA_CEASection5hgOrder/download. The EU Exemptive Order exempts each of the MTFs and OTFs listed in Appendix A thereto, as such Appendix A may be amended by the Commission from time to time (the “Exempt EU Trading Venues”), from registration with the Commission as a swap execution facility. 16 On March 13, 2019, the Commission issued an Order of Exemption with respect to approved exchanges (“AEs”) and recognized market operators (“RMOs”) authorized in Singapore (the “SG Exemptive Order,” available at https://www.cftc.gov/sites/default/files/2019-03/SingaporeCEASection5hgOrder.pdf), as most recently amended by the “Third Amendment to Appendix A to Order of Exemption,” dated July 31, 2024 (available at https://www.cftc.gov/media/11046/SingaporeThirdAmendmentAppendixA_CEASection5hgOrder/download). The SG Exemptive Order exempts each of the AEs and RMOs listed in Appendix A thereto, as such Appendix A may be amended by the Commission from time to time (the “Exempt SG Trading Venues”), from registration with the Commission as a swap execution facility. 17 On July 11, 2019, the Commission issued an Order of Exemption with respect to electronic trading platforms (“ETPs”) registered in Japan (the “Japan Exemptive Order” and, together with the EU Exemptive Order and the SG Exemptive Order, the “SEF Exemptive Orders,” available at https://www.cftc.gov/media/2216/JapaneseCEASection5hgOrder/download). The Japan Exemptive Order exempts each ETP listed in Appendix A
thereto, as such Appendix A may be amended by the Commission from time to time (the “Exempt Japan Trading Venues”), from registration with the Commission as a swap execution facility. 18 On December 1, 2022, CFTC staff issued Staff Letter 22-16 (“Letter 22-16”), a no-action letter providing a no￾action position to UK entities related to Brexit, including a no-action position for certain UK authorized MTFs and OTFs. See CFTC Staff Letter No. 22-16 (Dec. 1, 2022), available at https://www.cftc.gov/csl/22-16/download. On August 28, 2024, CFTC staff issued Staff Letter 24-11 (“Letter 24-11”), which is the most recent no-action letter and extends a no-action position provided to UK entities in Letter 22-16. See CFTC Staff Letter 24-11 (Aug. 28, 2024), available at https://www.cftc.gov/csl/24-11/download. For purposes of Letter 24-11 (superseding Letter 22-16), an “Eligible UK Trading Venue” means an MTF or OTF that is (i) authorized within the UK and (ii) listed in Appendix A to Letter 24-11 (superseding Appendix A to Letter 22-16); provided, however, to the extent this no-action position is amended or extended, only those MTFs and OTFs included in the most recent amendment or extension (or its successor) shall be an Eligible UK Trading Venue.

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Exempt DCOs
Similarly, section 5b(h) of the CEA authorizes the Commission to exempt, conditionally or unconditionally, a derivatives clearing organization from registration, if the Commission finds that the derivatives clearing organization is “subject to comparable, comprehensive supervision and regulation by… the appropriate government authorities in the home country of the organization.”19

After the issuance of Letter 13-70 and prior to the issuance of Letter 23-01, the Commission issued exemptions from registration to four derivatives clearing organizations: 20 ASX Clear (Futures) Pty Limited (“ASX”); 21 Japan Securities Clearing Corporation (“JSCC”); 22 Korea Exchange, Inc. (“KRX”); 23 and OTC Clearing Hong Kong Limited (“OTC Clear”). 24 Any derivatives clearing organization that, as of any date of determination, is exempt from registration as a derivatives clearing organization under section 5b of the CEA, including, without limitation, ASX, JSCC, KRX, and OTC Clear, is an Exempt DCO on such date for purposes of the discussion of Letter 23-01 below. 25 19 7 U.S.C. § 7a-1(h). 20 Information related to the exemption of derivatives clearing organization registration is available at https://www.cftc.gov/IndustryOversight/ClearingOrganizations/index.htm. 21 On August 18, 2015, the Commission issued an Order of Exemption with respect to ASX, available at http://www.cftc.gov/ucm/groups/public/@otherif/documents/ifdocs/asxclearfutdcoexemptorder.pdf. On January 28, 2016, the Commission issued an Amended Order of Exemption, available at http://www.cftc.gov/ucm/groups/public/@otherif/documents/ifdocs/asxclearamdorderdcoexemption.pdf. These orders exempt ASX from registration with the Commission as a derivatives clearing organization, subject to the terms and conditions of the most recent order. 22 On October 26, 2015, the Commission issued an Order of Exemption with respect to JSCC, available at http://www.cftc.gov/idc/groups/public/@otherif/documents/ifdocs/jsccdcoexemptorder10-26-15.pdf. On May 15, 2017, the Commission issued an Amended Order of Exemption, available at http://www.cftc.gov/idc/groups/public/@otherif/documents/ifdocs/jsccdcoexemptamdorder5-15-17.pdf. On September 12, 2025, the Commission issued a further amended exemptive order, available at https://www.cftc.gov/media/12671/JSCC%20AmendedExemptionOrder_09-12-2025/download. These orders exempt JSCC from registration with the Commission as a derivatives clearing organization, subject to the terms and conditions of the most recent order. 23 On October 26, 2015, the Commission issued an Order of Exemption with respect to KRX, available at http://www.cftc.gov/idc/groups/public/@otherif/documents/ifdocs/krxdcoexemptorder10-26-15.pdf. This order exempts KRX from registration with the Commission as a derivatives clearing organization, subject to the terms and conditions of the order. 24 On December 21, 2015, the Commission issued an Order of Exemption with respect to OTC Clear, available at http://www.cftc.gov/idc/groups/public/@otherif/documents/ifdocs/otccleardcoexemptorder12-21-15.pdf. This order exempts OTC Clear from registration with the Commission as a derivatives clearing organization, subject to the terms and conditions of the order. 25 On February 14, 2024, subsequent to MPD’s issuance of Letter 23-01, the Commission issued an Order of Exemption with respect to the
Taiwan Futures Exchange Corporation (“TAIFEX”), which exempts TAIFEX from registering with the Commission as a DCO, subject to certain terms and conditions in the order, available at https://www.cftc.gov/media/10251/TAIFEX%20Order%20of%20Exemption%20from%20DCO%20Registration%2 002-14-24/download.

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D. Letter 23-01
In 2022, the International Swaps and Derivatives Association, Inc. (“ISDA”) requested that staff expand the scope of the ITBC Swaps covered under the no-action position in Letter 13-70 to include: (i) all swaps that are of a type accepted for clearing at execution; and (ii) swaps that are intended to be cleared through an Exempt DCO or that are executed on or pursuant to the rules of an Exempt SEF. 26 In its request, ISDA noted that the cleared swaps market has grown considerably following the issuance of Letter 13-70, both in the number of swaps cleared as well as in the range of types of swaps that are cleared through DCOs and Exempt DCOs. 27 For example, they noted that in connection with the discontinuation of the London Interbank Offered Rate, swaps referencing the Secured Overnight Financing Rate had begun to be cleared. 28 ISDA argued that applying the full range of business conduct and documentation requirements to all ITBC Swaps that are of a type accepted for clearing by a DCO or Exempt DCO at execution is unnecessary. Specifically, according to ISDA, these swaps are sufficiently standardized so as to obviate the need for material risk, characteristics, incentives, and mid-market mark disclosures, as well as obligations related to institutional suitability. 29 Finally, ISDA argued that once the swap is immediately cleared through a DCO or Exempt DCO, there is no ongoing relationship between the counterparties, and imposing the requirements subject to this relief on SDs would not be meaningful given that the swap at issue is immediately replaced with two DCO – or Exempt DCO – facing swaps after execution. 30 After considering the request and for the reasons provided in Letter 23-01, 31 MPD issued Letter 23-01, which superseded Letter 13-70 in its entirety. 32 Letter 23-01 provided a revised MPD no￾action position which incorporated, expanded on, and refined the MPD no-action position presented in Letter 13-70. 33 Among these changes and subject to certain conditions as more fully described in Letter 23-01, 34 MPD expanded the scope of the ITBC Swaps covered by its no-action position to all swaps of a type accepted for clearing by an Eligible DCO on the date of execution; and swaps that are executed on or pursuant to the rules of an Exempt SEF. In addition, MPD stated that its position in Letter 23-01 would expire on December 31, 2025. 26 See ISDA Request Letter (May 31, 2022) (included with Letter 23-01, summarizing summary of the market participants’ arguments for requesting a no-action position), available at https://www.cftc.gov/csl/23- 01/request_letter/download. 27 See ISDA Request Letter at 4. 28 Certain of such SOFR swaps are now required to be cleared. See Clearing Requirement Determination Under
Section 2(h) of the Commodity Exchange Act for Interest Rate Swaps To Account for the Transition From LIBOR
and Other IBORs to Alternative Reference Rates, 87 FR 52182, 52207 (Aug. 24, 2022) (“The Commission is adopting a clearing requirement for USD SOFR . . . that will be implemented on October 31, 2022 . . .”). 29 ISDA Request Letter at 4. 30 Id. 31 See Letter 23-01 at 7–8. 32 Id. at 1. 33 Id. at 7–10. 34 Id. at 8–10.

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E. EBCS STRD Final Rule and ITBC Swaps
On December 18, 2025, the Commission issued the EBCS STRD Final Rule to amend the External BCS and STRD Requirement. Among these amendments, the Final Rule codified, with certain modifications, Letter 23-01 by providing exceptions from the External BCS and STRD Requirement for certain ITBC Swaps (as defined in the Final Rule). One of the non-exclusive conditions for the exceptions to the External BCS is that the relevant ITBC Swap be initiated on a trading facility currently exempted from registration as a swap execution facility by the Commission pursuant to section 5h(g) of the Act. 35 Notably, this does not include an Eligible UK Trading Venue benefiting from a no-action position, as discussed above. Similarly, the definition of ITBC Swap has different requirements depending on whether the swap is executed on or pursuant to the rules of a DCM, SEF, or a trading facility currently exempted from registration as a swap execution facility by the Commission pursuant to Section 5h(g) of the Act.
II. MPD No-Action Position on Eligible UK Trading Venues
MPD is issuing this letter to provide market participants certainty with respect to its treatment of ITBC Swaps initiated on an Eligible UK Trading Venue. MPD will not recommend that the Commission commence an enforcement action against an SD or MSP solely as a result of it treating an Eligible UK Trading Venue as a trading facility currently exempted from registration as a swap execution facility by the Commission pursuant to Section 5h(g) of the Act for purposes of the definition of an ITBC Swap under Commission regulation 23.401(d) 36 and the Subject EBCS in relation to ITBC Swaps. This letter, and the position taken herein, represent the views of MPD only, and do not necessarily represent the position or view of the Commission or of any other office or division of the Commission. This letter and the no-action position taken herein are not binding on the Commission. 37 Further, this letter, and the position taken herein, are based upon the facts and circumstances presented to MPD staff. Any different, changed or omitted material facts or circumstances might render the position taken in this letter void. Finally, as with all staff letters, MPD retains the authority to condition further, modify, suspend, terminate, or otherwise restrict the terms of the position taken herein, in its discretion. Questions concerning the relief provided by MPD in this letter may be directed to Frank Fisanich, Deputy Director, at (202) 418-5949 or ffisanich@cftc.gov; Jacob Chachkin, Associate Director, at 35 See 17 CFR 23.430, 431, 432, 434, 440, and 23.450 (collectively, the “Subject EBCS”). For example, the exception for ITBC Swaps in 17 CFR 23.430(e)(4) applies to “[a]n ITBC Swap initiated on a swap execution facility, or a trading facility currently exempted from registration as a swap execution facility by the Commission pursuant to section 5h(g) of the Act.” 36 17 CFR 23.401(d). 37 See Commission regulation 140.99(a)(2), 17 CFR 140.99(a)(2) (“A no-action letter binds only the issuing Division . . . and not the Commission or other Commission staff.”).

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202-418-5496 or jchachkin@cftc.gov; or Danielle Abada, Senior Special Counsel, at 646-746- 3931 or dabada@cftc.gov. Sincerely, _______________________ Thomas J. Smith Acting Director Market Participants Division cc: Kathleen Clapper, Compliance National Futures Association, Chicago Michael Otten, OTC Derivatives National Futures Association, New York