CFTC Extends No-Action Relief for Dodd-Frank Act Requirements | White & Case LLP International Law Firm, Global Law Practice
CFTC Extends No-Action Relief for Dodd-Frank Act Requirements

CFTC Extends No-Action Relief for Dodd-Frank Act Requirements

CFTC extends existing no-action relief regarding the application of Transaction-Level Requirements to certain cross-border swap transactions.

On August 13, 2015 the Commodity Futures Trading Commission ("CFTC") issued CFTC No-Action-Letter 15-48 which extended already existing relief for non-US Swap Dealers regarding the application of certain requirements of the Dodd-Frank Wall Street Reform and Consumer Protection Act ("Dodd-Frank Act") to cross-border swap transactions covered by the relief.[1]

Background

Under the regulatory framework established by the Dodd-Frank Act, registered Swap Dealers must comply with risk management, internal and external business conduct, and reporting and recordkeeping requirements, among other things. In applying these requirements to cross-border swap transactions, the CFTC under its cross-border guidance[2] divided them into two categories – Entity-Level Requirements and Transaction-Level Requirements – which were then applied to cross-border swap transactions pursuant to the guidelines set out in the guidance. For further information on these requirements and the CFTC’s cross-border guidance in general please refer to our client alert available here.

Under CFTC Staff Advisory 13-693 which was issued on November 14, 2013, the CFTC’s Division of Swap Dealer and Intermediary Oversight stated that, in its view, non-US Swap Dealers (whether an affiliate or not of a US person) who regularly use personnel or agents located in the U.S. to arrange, negotiate, or execute a swap transaction with a non-US person would generally be required to comply with the Transaction-Level Requirements.[3]

Exemptive Relief

Following the release of CFTC Staff Advisory 13-69, the CFTC received multiple requests from non-U.S. Swap Dealers for relief. In response, on November 26, 2013, the CFTC granted time-limited relief for non-US Swap Dealers from compliance with the Transaction-Level Requirements in certain circumstances when entering into swaps with non-US persons who are not guaranteed affiliates or conduit affiliates of a US person using personnel or agents located in the United States to arrange, negotiate, or execute such swaps (such swaps, the "Covered Transactions"). This relief was subsequently extended by a series of no-action letters to September 30, 2015.[4] With the issuance of CFTC No-Action Letter 15-48, the CFTC has further extended this relief to September 30, 2016, unless the CFTC takes other action prior to this date.

As a result, during this period, the CFTC will not take enforcement action against a non-US Swap Dealer for failure to comply with:

(a) if a Covered Transaction is not with a Non-US Swap Dealer, any applicable Transaction-Level Requirement with respect to the Covered Transaction; and
(b) if the Covered Transaction is with a Non-US Swap Dealer, any Transaction-Level Requirement other than (i) the multilateral portfolio compression requirements under CFTC Rule 23.503; and (ii) the swap trading relationship requirements under CFTC Rule 23.504.

 

Search for more White & Case Derivatives Insights.

 

[1] cftc.gov/ucm/groups/public/@lrlettergeneral/documents/letter/15-48.pdf
[2] Interpretive Guidance and Policy Statement Regarding Compliance with Certain Swap Regulations, 78 Fed. Reg. 45,292 (July 26, 2013).
[3] cftc.gov/ucm/groups/public/@lrlettergeneral/documents/letter/13-69.pdf
[4] CFTC No-Action Letter 13-71 (granting relief to January 14, 2014), CFTC No-Action Letter 14-01 (extending relief to September 15, 2014), CFTC No-Action Letter 14-74 (extending relief to December 31, 2014) and CFTC No Action Letter 14-140 (extending relief to September 30, 2015).

 

This publication is provided for your convenience and does not constitute legal advice. This publication is protected by copyright.
© 2015 White & Case LLP