On October 31, the Commodity Futures Trading Commission’s Division of Market Oversight extended no-action relief for certain swaps executed as part of packaged transactions. Transactions where at least one swap is subject to a trade execution requirement and either (1) at least one individual component is a bond issued and sold in the primary market or (2) all other components are futures contracts, are provided relief from the following requirements:

  • Commodity Exchange Act (CEA) Section 2(h)(8) (providing relief from the requirement that the swap components of the transaction subject to the trade execution requirement be executed on a swap execution facility (SEF) or designated contract market (DCM));
  • CFTC Regulation 37.9 and CEA Section 5(d) (allowing an SEF or DCM to offer any method of execution for swap components); and
  • CFTC Regulation 37.3(a)(2) (permitting SEFs to not offer an order book as a minimum trading functionality for swap components).

The following transactions are provided the relief described in the second and third bullet points above:

  • Transactions where at least the swap component is subject to the trade execution requirement and:
    • at least one of the components is a CFTC swap that is not subject to the clearing requirement;
    • at least one of the components is not a swap; or
    • at least one of the components is a swap over which the CFTC does not have exclusive jurisdiction.

The no-action relief expires November 15, 2020. The CFTC’s announcement is available here.