In a recently released no-action letter, the Commodity Futures Trading Commission indicated it would not seek enforcement action against a US swap dealer and its counterparties where a foreign branch of the US swap dealer proposed not to comply with CFTC transaction-level requirements in limited circumstances. Specifically, Wells Fargo represented that it only conducts swap activity outside the United States through one branch in London. It requested relief from transaction-level requirements with respect to swaps entered into by that branch with non-US person clients that are (1) not guaranteed or conduit affiliates and (2) located outside of jurisdictions for which the CFTC has made substituted compliance determinations. Instead, Wells Fargo indicated that it and its counterparties would comply with requirements relevant to such clients in the applicable foreign jurisdictions. The relief granted was premised on the fact that the aggregate notional value of the swaps entered into by Wells Fargo with such clients does not exceed 5 percent of the aggregate notional value of all of Wells Fargo’s swaps. Wells Fargo will be required to maintain information to verify the aforementioned 5 percent threshold and to address any significant risk arising from the fact that it will not comply with CFTC transaction-level requirements in these circumstances.

The no-action letter can be found here.