Time-Limited No-Action Relief for Designated Contract Markets from Compliance with Regulation 38.152

U.S. COMMODITY FUTURES TRADING COMMISSION
Three Lafayette Centre
1155 21st Street, NW, Washington, DC 20581
Telephone: (202) 418-5430
Facsimile: (202) 418-5536
CFTC Letter No. 14-50
No-Action
April 18, 2014
Division of Clearing and Risk
Division of Market Oversight
Time-Limited No-Action Relief for Designated Contract Markets from Compliance with Certain Requirements of Commission Regulation 38.152 The Division of Clearing and Risk and the Division of Market Oversight (together, “the Divisions”) of the Commodity Futures Trading Commission (“Commission”) are issuing this letter to provide no-action relief for designated contract markets (“DCMs”) from compliance with certain requirements of Commission Regulation 38.152. 1 This no-action relief shall commence on the date of issuance of this letter and shall expire on June 30, 2014.
I. Background
On April 9, 2012, the Commission published regulations addressing the timing of acceptance for clearing and clearing member risk management. 2 Regulation 1.73 and Regulation
23.609 require futures commission merchants (“FCMs”) and swap dealers (“SDs”), respectively,
that are clearing members of a registered derivatives clearing organization (“DCO”) to establish risk-based limits and screen orders for compliance with those limits. Regulation 38.601(b) requires a DCM to coordinate with each DCO to which it submits transactions for clearing, to develop rules and procedures to facilitate prompt and efficient transaction processing. Regulations 1.74, 23.610, and 39.12(b)(7) set forth time frames for FCMs, SDs, and DCOs, respectively, to accept or reject trades for clearing. On June 19, 2012, the Commission published regulations governing DCMs. 3 Regulation
38.152 requires a DCM to prohibit certain abusive trading practices, including pre-arranged
trading (except for block trades or other types of transactions certified to or approved by the Commission).