On December 17, the Commodity Futures Trading Commission’s Division of Market Oversight issued CFTC Letter No. 20-45, which extends relief from the trade execution requirement for certain inter-affiliate transactions provided under CFTC Letter No. 17-67 (available here) and prior staff letters. CFTC Letter No. 17-67 provides relief from the trade execution requirement under CFTC Regulation 50.52(a) with regard to swaps that are entered into by eligible affiliate counterparties and cleared, regardless of the affiliates’ ability to claim the inter-affiliate clearing exemption under CFTC Regulation 50.52(b). The no-action relief was set to expire on December 31.
On December 7, the CFTC approved a final rule that established two exemptions from the trade execution requirement (Final Rule). Importantly, the Final Rule codifies the no-action relief provided under CFTC Letter No. 17-67. Upon the effective date of the Final Rule, further no-action relief will be unnecessary. However, the Final Rule will not become effective until 30 days after publication in the Federal Register, the date of which is currently uncertain. CFTC Letter No. 20-45 extends the current no-action relief until the effective date of the Final Rule.
CFTC Letter No. 20-45 is available here.