Extension of No-Action Relief for Swaps in Certain Package Transactions

Division of
Market Oversight
Dorothy DeWitt
Director
Re: Extension of No-Action Relief 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 existing no-action relief, 1 as set forth in CFTC Letter No. 17-55, from requirements in sections 2(h)(8) and 5(d)(9) of the Commodity Exchange Act (“CEA” or “Act”) and from requirements in Commission regulations 37.3(a)(2) and 37.9 for swaps executed as part of certain package transactions. 2 As set forth in CFTC Letter No. 17-55 and in Appendix A to this letter, the categories of package transactions for which the Division is extending no-action relief are those 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 where one of the following applies: (1) at least one individual component is a bond issued and sold in the primary market (“MAT/New Issuance Bond Package Transactions”); 3 (2) all other components are contracts for the purchase 1 This letter responds to a request received from ICAP Global Derivatives Limited (“IGDL”) and tpSEF, Inc. (“tpSEF”) (collectively the “TP ICAP SEFs”) that the Division extend the relief provided under CFTC Letter No. 17-55. 2 The Division previously provided no-action relief for certain package transactions in CFTC Letter Nos. 14-12, 14-62, 14-137, 15-55, 16-76, and 17-55. For purposes of the relief granted 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. 3 This category does not include package transactions where at least one individual swap component is subject to the trade execution requirement and at least one individual component is a bond transaction that occurs in the secondary market, such transactions would qualify as MAT/Non-Swap Instruments Package Transactions as defined herein. The Division understands that a bond issued and sold in the primary market that may constitute
part of a package transaction is a “security,” as defined in section 2(a)(1) of the Securities Act of 1933 or
section 3(a)(10) of the Securities Exchange Act of 1934. To the extent that SEFs and DCMs may be facilitating
package transactions on their respective trading systems, facilities, or platforms that involve a security, or any U.S. COMMODITY FUTURES TRADING COMMISSION Three Lafayette Centre 1155 21st Street, NW, Washington, DC 20581 Telephone: (202) 418-5000 CFTC Letter No. 20-31 No-Action October 09, 2020