RegAlert2013-10-25 | CFTC Staff Letter 13-66Added · Updated
Time-Limited No-Action Relief for Swap Execution Facilities from Compliance with Certain Requirements of Commission Regulation 37.9(a)(2) and 37.203(a)
The Divisions of the Commodity Futures Trading Commission will not recommend enforcement action against Swap Execution Facilities (SEFs) for failing to comply with Regulation 37.9(a)(2) or Regulation 37.203(a) if they permit a "new trade, old terms" procedure for trades rejected due to clerical or operational errors. This relief allows SEFs to accept a new trade with matching terms, excluding the error and execution time, provided both clearing members and their customers consent on a case-by-case basis. The procedure must be submitted within 30 minutes of rejection, subject to pre-execution credit checks, and reported to swap data repositories with specific cancellation and termination data. This no-action relief is effective from the letter's issuance date and expires on June 30, 2014.
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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. 13-66
No-Action
October 25, 2013
Division of Clearing and Risk
Division of Market Oversight
Time-Limited No-Action Relief for Swap Execution Facilities from Compliance with Certain Requirements of Commission Regulation 37.9(a)(2) and 37.203(a) 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 swap execution facilities (“SEFs”) from compliance with certain requirements of Commission Regulations 37.9(a)(2) and 37.203(a). 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 37.702(b) requires a SEF 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 4, 2013, the Commission published regulations governing SEFs. 3 Regulation 37.9(a)(2) establishes requirements for the method of execution of transactions on a SEF in swaps that are subject to the trade execution requirement of Section 2(h)(8) of the Commodity Exchange Act (“CEA”). 4 Regulation 37.203(a) requires a SEF to prohibit certain abusive trading
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Source: Commodity Futures Trading Commission — original document · Summary generated with machine assistance and reviewed before publication; the authoritative text is the regulator's original document. How RegAlert works
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