Extension of No-Action Relief for Korea Exchange Regarding Section 5b(a) of the Commodity Exchange Act

U.S. COMMODITY FUTURES TRADING COMMISSION
Three Lafayette Centre
1155 21st Street, NW, Washington, DC 20581
Telephone: (202) 418-5000
Facsimile: (202) 418-5521 www.cftc.gov
Division of Clearing and
Risk
CFTC Letter No. 14-150
No-Action
December 18, 2014
Division of Clearing and Risk
Mr. Kiwon Kang
President & COO
Derivatives Markets Division
Korea Exchange, Inc.
825-3, beomil-dong, Dong-gu
Busan 601-720, Republic of Korea
Re: Extension of No-Action Relief with Regard to Section 5b(a) of the Commodity Exchange Act and Commission Regulations Thereunder Dear Mr. Kang:
This is in response to your letter dated December 5, 2014 (“Letter”) to the Division of Clearing and Risk (“Division”) of the Commodity Futures Trading Commission (“Commission”). In the Letter, you request that the Division extend the no-action relief granted to Korea Exchange, Inc. (“KRX”) by letter dated June 26, 2014, 1 from the derivatives clearing organization (“DCO”) registration requirement under Section 5b(a) of the Commodity Exchange Act (“CEA”). Pursuant to the no-action relief, KRX is permitted to clear Korean Won-denominated interest rate swaps (“KRW IRS”) for proprietary trades of U.S. clearing members. The relief is set to expire at the earlier of: (i) December 31, 2014; or (ii) the date on which the Commission either registers KRX as a DCO under Section 5b(a) of the CEA, or the Commission exempts KRX from registration pursuant to Section 5b(h) of the CEA. By letter dated November 26, 2014, the Division informed KRX that it was amenable to extending the no-action relief until December 31, 2015, subject to KRX notifying the Division, no later than December 15, 2014, that it will file by June 30, 2015: (i) a materially complete Form DCO application for registration as a DCO; or (ii) a petition for an exemption from registration. The Division’s letter also set forth the standards and procedures applicable to a petition for an exemption from registration.