By a vote of 3-2, on July 23, the Commodity Futures Trading Commission adopted its Final Cross-Border Swaps Rulemaking (Final Cross-Border Rule), which codifies several parts of the CFTC’s existing interpretive guidance and policy statement on the subject. Among other things, the Final Cross-Border Rule establishes key definitions, some of which are revised definitions of existing terms used in the interpretive guidance (e.g., the definition of “U.S. Person”) and others which are new. The rule also addresses which cross-border swaps must be considered for the purposes of the swap dealer registration threshold.
Most notably, it formally withdraws the 2013 CFTC staff advisory applying the CFTC’s transactional requirements to swaps between non-US persons that are arranged, negotiated and executed by US personnel (ANE Transactions). As a result, non-US swap dealers do not have to apply certain transaction-level requirements, including certain external business conduct requirements. In conjunction with the CFTC’s adoption of the Final Cross-Border Rule, staff from the CFTC’s Divisions of Swap Dealer and Intermediary Oversight, Clearing and Risk, and Market Oversight issued no-action relief from the application of the CFTC’s mandatory clearing, mandatory trading and real-time public reporting requirements to ANE Transactions. In the Final Cross-Border Rule, the CFTC stated its intention to address the application of the remaining transaction-level requirements to ANE Transactions in future cross-border rulemakings.
While the Final Cross-Border Rule takes effect 60 days after publication in the Federal Register, swap dealers must comply with the rule’s various new requirements (such as new recordkeeping requirements) 365 days after publication in Federal Register.
More information on the Final Cross-Border Rule is available here.
More information on No-Action Letter 20-21 is available here.
Katten is planning to publish an advisory providing more detailed coverage of the Final Cross-Border Rule and No-Action Letter 20-21.