On November 30, the Commodity Futures Trading Commission issued No-Action Letter (NAL) 17-64, which extends, for an additional three years, swap reporting relief originally granted to most swap dealers established under the laws of Australia, Canada, the European Union, Japan or Switzerland (collectively, the “Enumerated Jurisdictions”) by NAL 13-75 (December 20, 2013). The relief continues to be unavailable to a non-US swap dealer in one of the Enumerated Jurisdictions that is affiliated with a US (1) swap dealer, (2) major swap participant, (3) bank, (4) bank holding company or (5) financial holding company.
The purpose of the original relief was to allow time for the CFTC and regulators from the Enumerated Jurisdictions to reach agreement on comparability determinations that would mitigate the potential burdens arising from the position taken by the CFTC in its Interpretive Guidance and Policy Statement Regarding Compliance With Certain Swap Regulations (78 Fed. Reg. 45292, July 26, 2013) that non-US swap dealers are obligated to report swaps with non-US persons to a US swap data repository (SDR), unless they are subject to a comparable reporting regime. As noted in NAL 17-64 and previous extension letters, such comparability determinations concerning swap reporting regimes have not yet been made due in large part to data privacy issues that have prevented the grant to foreign regulators of direct access to swaps data.
The relief being extended, which was set to expire on December 1, now expires with respect to any non-US swap dealer on the earlier of (a) 30 days following the issuance of a comparability determination by the CFTC with respect to the swap reporting rules for the jurisdiction in which the non-U.S. swap dealer is established, or (b) December 1, 2020. The letter contains the explicit advance warning that the CFTC “has no current intention to provide any further extensions after the expiration of the no-action relief provided herein.” This self-imposed limit can be interpreted as a message being sent by the CFTC to its regulatory counterparts in the Enumerated Jurisdictions that three years is a reasonable time period for reaching agreement on all comparability issues.
As before, the relief does not have any effect on the reporting obligations of a US person registered as a swap dealer executing a swap with a non-US counterparty or on the reporting obligations of a non-US person swap dealer established in a country other than one of the Enumerated Jurisdictions.
The CFTC press release concerning NAL 17-64 is available here.
NAL 17-64 is available here.