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On December 16, the Securities and Exchange Commission announced that it adopted a rule to limit the potential for overlapping or duplicative regulation within its security-based swap regulatory regime. Specifically, the rule exempts certain activities of security-based swap execution facilities (SEFs) and security-based swap dealers from triggering the requirement also to register as a clearing agency. The adopted rule is in line with similar exemptions for broker-dealers and national securities exchanges.
Continue Reading SEC Adopts Clearing Agency Rule to Limit Potential for Overlapping or Duplicative Regulation

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.
Continue Reading CFTC Extends Temporary No-Action Relief From Trade Execution Requirement for Certain Affiliated Counterparties

On December 8, the Commodity Futures Trading Commission (CFTC) approved a final rule amending Part 37 of the CFTC Regulations addressing operational issues facing swap execution facilities (SEF) and their market participants in connection with the CFTC’s regulatory requirements for a SEF’s audit trail data, financial resources, and chief compliance officer (CCO). Specifically, the Final Rule (1) eliminates the requirement for a SEF to capture and retain post-execution allocation information in its audit trail data, (2) applies the existing Core Principle 13 financial resources requirements to SEF operations in a less burdensome manner, and (3) streamlines requirements for the CCO position and allows SEF management to exercise greater discretion in CCO oversight.
Continue Reading CFTC Unanimously Approves Final Rules Related to SEFs and Withdraws Comprehensive Proposals

On December 3, the Commodity Futures Trading Commission’s (CFTC) Division of Clearing and Risk (DCR) and Division of Market Oversight (DMO, and collectively, the Divisions) issued CFTC Letter No. 20-43, an interpretation regarding Sections 2(h)(1) and 2(h)(8) of the Commodity Exchange Act (CEA) and the CFTC regulations thereunder.
Continue Reading CFTC Interprets and Issues No-action Relief from Certain Clearing and Trade Execution Requirements

On December 4, the Commodity Futures Trading Commission’s (CFTC) Market Participants Division (MPD) and Division of Clearing and Risk (DCR) jointly issued no-action relief, effective immediately, to provide greater certainty to the global marketplace in connection with the withdrawal of the United Kingdom from the European Union. The relief permits market participants to transfer certain swaps to an affiliate without such swaps becoming subject to the CFTC’s swap clearing requirement or uncleared swap margin requirement. The relief applies to transfers that occur up to one year following the conclusion of the transition period.
Continue Reading CFTC Staff Provides Further Brexit-Related Relief to Provide Market Certainty

On December 8, the National Futures Association (NFA) issued Notice I-20-45 to remind member firms that the compliance date for NFA’s Swaps Proficiency Requirements (Requirements) is January 31, 2021 (Compliance Date). As more fully discussed in the July 10, 2020 edition of the Corporate & Financial Weekly Digest,
Continue Reading NFA Issues Notice to Members Regarding Compliance Date Swaps Proficiency Requirements

On November 19, the Commodity Futures Trading Commission’s Division of Market Oversight (DMO) issued a staff letter extending no-action relief to certain CFTC-registered swap dealers (SDs) and major swap participants (MSPs). The no-action relief, which was initially granted in 2013 and subsequently extended several times, was set to expire on December 1.
Continue Reading CFTC Extends Temporary Swap Data Reporting Relief for Certain International Swap Dealers and Major Swap Participants

On November 13, the Commodity Futures Trading Commission’s Division of Market Oversight (DMO) issued CFTC Staff Letter No. 20-35, which extends temporary no-action relief to swap execution facilities (SEFs) and other market participants originally provided by CFTC Staff Letter No. 17-60. (For additional information regarding CFTC Staff Letter No. 17-60, please refer to the November 17, 2017 edition of Corporate & Financial Weekly Digest.) Staff Letter No. 17-60 provided that DMO would not recommend enforcement action against a SEF that has rules and/or procedures that use the SEF’s non-order book trading systems or platforms to facilitate the execution of block trades for swaps that are intended-to-be-cleared, and thus are not compliant with CFTC Regulation 43.2, subject to certain conditions being met.
Continue Reading CFTC Extends Relief for SEFs From Certain Block Trade Requirements

On November 13, the Commodity Futures Trading Commission’s Division of Market Oversight (DMO) issued CFTC Staff Letter No. 20-36, which extends no-action relief to swap execution facilities (SEFs) from the requirement to capture post-execution allocation information in their audit trail data.
Continue Reading CFTC Extends No-Action Relief to SEFs From Certain Audit Trail Requirements Related to Post-Execution Allocation Information

On November 18, the Commodity Futures Trading Commission unanimously approved a final rule (Final Rule) establishing a framework for the CFTC to grant a clearing organization organized outside of the US an exemption from registration as a derivatives clearing organization (DCO) to permit the clearing organization to clear swaps transactions on behalf of certain US persons. Subject to the terms and conditions set out in the Final Rule, the CFTC may grant an exemption from registration if: (1) the CFTC determines that the clearing organization is subject to comparable, comprehensive supervision and regulation by its home country authorities; and (2) the clearing organization agrees that its clearing services on behalf of US persons will be limited to:
Continue Reading CFTC Unanimously Approves Final Rule for Granting Exemptions From DCO Registration