On November 18, the Commodity Futures Trading Commission (CFTC) unanimously approved a final rule (Final Rule) amending CFTC regulations relating to the execution of “package transactions” on swap execution facilities (SEFs) and the resolution of error trades on SEFs.
The final rule amends part 37 of CFTC regulations to allow the swap components of certain categories of package transactions to be executed on-SEF but through flexible means of execution, as opposed to the prescribed methods of execution for “required transactions.” In addition, the Final Rule amends part 36 of CFTC regulations to provide for an exemption from the trade execution requirement for swap transactions that are executed as a component of a package transaction that also includes a new issuance bond component. The Final Rule codifies the majority of relief currently provided in CFTC No-Action Letter No. 20-31.
The Final Rule also enables SEFs to permit market participants to execute swaps transactions to correct operational or clerical errors using execution methods other than those required by CFTC regulations for required transactions. The Final Rule codifies the intent of CFTC No-Action Letter Nos. 17-27 and 20-01 to allow SEFs and market participants to correct operational or clerical errors.
The Final Rule will become effective 60 days after publication in the Federal Register.
The Final Rule is available here.