Procedures for Submission of Risk Exposure Reports and Chief Compliance Officer Annual Reports by Swap Dealers and Major Swap Participants

Division of Market Oversight and Office of Data and Technology Advisory Regarding Upcoming Legal Entity Identifier Deadline

Frequently Asked Questions (FAQ) on the Reporting of Cleared Swaps - Revised

Office of General Counsel (“OGC”) Response to Frequently Asked Questions Regarding Certain Physical Commercial Agreements for the Supply and Consumption of Energy

Q&A: On Start of Swap Data Reporting

The Division of Swap Dealer and Intermediary Oversight issued a no-action letter that provides swap dealers and major swap participants with relief from certain disclosure requirements prescribed under Commission Regulation 23.431. The relief provided in the no-action letter is applicable to certain transactions in foreign exchange swaps and foreign exchange forwards. The relief provided in the no-action letter is applicable to all swap dealers, subject to the conditions and limitations set forth in the letter.
Commission Regulation 23.431; No-Action
13-12

The Division of Swap Dealer and Intermediary Oversight (DSIO) issued a time-limited no-action letter that provides swap dealers with relief from certain External Business Conduct Standards rules in the context of prime brokerage arrangements, subject to the conditions and limitations set forth in the letter.

P art 23, Subpart H, of the Commission’s Regulations; No-Action
13-11

The CFTC’s Division of Market Oversight has issued a no-action letter providing swap counterparties that are not swap dealers or major swap participants (“non-SD/MSP counterparties) with certain time-limited relief from the reporting requirements of the CFTC’s swap data reporting rules, which are set forth at Parts 43, 45 and 46 of the CFTC’s regulations.
Parts 43, 45 and 46 of the CFTC’s regulations; No-Action
13-10

No-Action Relief for Swaps Between Affiliated Counterparties That Are Neither Swap Dealers Nor Major Swap Participants from Certain Swap Data Reporting Requirements Under Parts 45, 46, and Regulation 50.50(b) of the Commission’s Regulations
Parts 45, 46, and 50; No-Action
13-09

The Division of Market Oversight is providing no-action relief to entities who are neither swap dealers or major swap participants with respect to certain reporting and recordkeeping requirements of the trade option exemption contained in Regulation 32.3.
Regulation 32.2, 32.3; No-Action
13-08

The Division of Swap Dealer and Intermediary Oversight issued a time-limited letter stating that DSIO will not recommend that the Commission take enforcement action against the commodity pool operators of securitization vehicles that are required to register by March 31, 2013 for failure to comply with certain enumerated sections in Part 4 of the Commission’s regulations, prior to June 30, 2013.   Provided that the commodity pool operators of securitization vehicles comply with the guidance set forth in the letter with respect to those sections.

Part 4

13-07

The Division of Clearing and Risk granted The Options Clearing Corporation, CME Clearing, MGEX, Inc., ICE Clear Europe Limited, ICE Clear U.S. Inc., New York Portfolio Clearing, LLC, and Kansas City Board of Trade Clearing Corporation an extension for compliance with Regulation 39.13(g)(8)(i) for customer gross margining, until January 15, 2013.

Regulation 39.13(g)(8)(i); Extension
Staff Letter

The Division of Clearing and Risk issued letters dated from October 26 to December 4, 2012 that grant an extension for compliance with Regulation 1.74(a) for certain FCMs for the timing of acceptance of trades for clearing.  On or before January 1, 2013, each FCM must accept or reject each trade submitted to it for clearing within 120 seconds.  On or before T+90, each FCM must accept or reject each trade submitted to it for clearing within 60 seconds.
Regulation 1.74; Extension

Barclays Capital Inc.
Citi Futures and OTC Clearing
Credit Suisse
Deutsche Bank Securities Inc.
Goldman Sachs & Co
J.P. Morgan
Merrill Lynch, Pierce, Fenner & Smith
Morgan Stanley
RBS Securities Inc.
UBS Securities LLC
Newedge USA, LLC

Division of Clearing and Risk staff issued an interpretation providing clarification that while regulation 22.2(d) prohibits an FCM from permitting a lien on Cleared Swaps Customer Collateral that it holds, regulation 22.2(d) does not prohibit a Cleared Swaps Customer from granting a lien on his or her own account at the FCM, nor does the regulation prohibit the FCM from taking action to foster the Cleared Swaps Customer’s grant of such a lien.
Regulation 22.2(d); Interpretation
12-28

The Division will not recommend that the Commission take an enforcement action against FCMs or IBs for failure to be fully compliant with Regulations 1.71(a)-(c), (e) and (f) until 60 days beyond the current June 4, 2012 compliance date of the Regulation (August 3, 2012).
Regulation 1.71; No-Action
12-26

The Division will not recommend that the Commission take enforcement action against certain foreign entities for failure to include a swap executed prior to the earlier of December 31, 2012, or the effective date of a definition of “U.S. person” in a final exemptive order, in its calculations required under the swap dealer and major swap participant definitions, so long as the counterparty to such swap does not fall within certain enumerated categories. The no-action letter also provides similar relief concerning certain swap transactions by certain foreign entities when the counterparty is a foreign branch of a person that falls within one of the enumerated categories and that intends to register as a swap dealer.
Regulations 1.3(ggg)(4) and 1.3(hhh); No-Action
12-22

Time Limited No-action Relief: Foreign Exchange Swaps and Foreign Exchange Forwards Not to be Considered in Calculating Aggregate Gross Notional Amount for Purposes of Swap Dealer De Minimis Exception or in Calculating Substantial Position in Swaps or Substantial Counterparty Exposure for Purposes of the Major Swap Participant Definition. Time-Limited No-action Relief for persons that meet the definitions of Commodity Pool Operators and Commodity Trading Advisors Solely as a Result of their Foreign Exchange Swap and Foreign Exchange Forward Activities.
Commission Regulation 1.3(ggg)(4); No-Action
12-21

The Division will not recommend that the Commission take enforcement action against any person for failure to include, in its calculation of the aggregate gross notional amount of swaps connected with its swap dealing activity for purposes of Commission Regulation 1.3(ggg)(4), a swap that (i) references an exempt commodity or agricultural commodity, and (ii) is executed prior to October 20, 2012. The Division also will not recommend that the Commission take enforcement action against any person for failure to include, in its calculation of daily average aggregate uncollateralized outward exposure and daily average aggregate potential outward exposure for purposes of Commission Regulation 1.3(jjj)(4), such exposures arising from any swap that references an exempt commodity or agricultural commodity, from October 12, 2012, through October 20, 2012, inclusive.
Commission Regulations 1.3(ggg)(4) and 1.3(hhh); No-Action
12-20

The Division of Swap Dealer and Intermediary Oversight issued an interpretative letter that clarifies, in light of the recent vacatur of the position limits rule, the scope of the bona fide hedging exemption from the trading thresholds as applied to the operators of registered investment companies pursuant to Regulation 4.5.
Commission Regulations 4.5 and 1.3(z);; Interpretation
12-19

The letter provides that the Division of Swap Dealer and Intermediary Oversight will not recommend that the Commission commence an enforcement action against a non-financial entity that regularly transacts in the physical energy markets for failure to apply to be registered as a swap dealer, if the entity limits its swaps connected with its dealing activities with publicly-owned, government-owned and federal agency utilities to no more than $800 million per year and other requirements set out in the letter are met.
1.3(ggg)(4); No-Action
12-18

Interpretations and no-action positions related to ECP status.
1a(18)(A); 2(e); 13(a); 17 C.F.R. § 23.430; No-Action; Interpretation
12-17

The letter provides that DSIO will not recommend that the Commission take enforcement action against any person for failure to include, in its calculation of the aggregate gross notional amount of swaps connected with its swap dealing activity for purposes of Commission Regulation 1.3(ggg)(4), a swap that (i) references an exempt commodity or agricultural commodity, (ii) is executed prior to December 31, 2012, and (iii) is either cleared on a derivatives clearing organization registered with the Commission, or entered into contingent upon its being subsequently exchanged for and cleared as a futures position as part of an exchange for related position transaction conducted in accordance with a DCM’s rules.
Regulation 1.3(ggg)(4); No-Action
12-16

The Commodity Futures Trading Commission’s (CFTC) Division of Swap Dealer and Intermediary Oversight (DSIO) issued several registration “no-action” positions. In the first position, DSIO announced that it will not recommend that the CFTC commence an enforcement action against any person who, solely by virtue of its swaps activity, would be required to register as an introducing broker, commodity pool operator, commodity trading advisor, AP of any of the foregoing or of an FCM, floor broker or floor trader, provided that on or before December 31, 2012, the person applies for registration. In the second position, DSIO announced a similar registration no-action position for any person who finds themselves required to register solely because of their involvement with the transition of certain contracts on ICE and NYMEX to clearing as commodity futures and options, provided that on or before December 31, 2012, the person applies for registration. In the third position, DSIO announced a no-action position that will permit an SD or MSP to employ a person as an AP, notwithstanding that the person is subject to a statutory disqualification, provided that the SD or MSP requests and receives from the National Futures Association advice that, notwithstanding the disqualification, the person would have been granted registration as an AP.
CEA Sections 4d, 4e, 4m, 4s(b)(6); and CFTC Part 3 Regulations; No-Action
12-15

The Division of Swap Dealer and Intermediary Oversight issued an interpretative letter excluding certain securitization vehicles from the definition of commodity pool, subject to certain conditions.
Section 1a(10) of the CEA and Commission Regulation 4.10(d); Interpretation
12-14

The Division of Swap Dealer and Intermediary Oversight determined that equity real estate investment trusts that satisfy certain criteria are outside the definition of commodity pool as that term is defined in Section 1a(10) of the Commodity Exchange Act and Commission Regulation 4.10(d). The requirements include deriving its income primarily from the ownership and operation of real estate and use derivatives for the limited purpose of mitigating their exposure to changes in interest rates or fluctuations in currency; complying with applicable provisions of the Internal Revenue Code; and identifying itself as an equity REIT on applicable Internal Revenue Service forms. The relief is self executing.
Section 1a(10) and Commission Regulation 4.10(d); Interpretation
12-13

The letter maintains the regulatory status quo with respect to the group of petitioners that have requested a an Order pursuant to Section 4(c)(6) of the CEA for certain government and cooperatively-owned electric utilities. The no-action letters will permit these market participants to continue to operate while the Commission considers the comments received on the proposed Orders issued in response to the respective petitions (the comment period has closed).
No action with respect to all provisions except general enforcement provisions; No-Action
12-12

Staff from the Division of Market Oversight, Division of Swap Dealer and Intermediary Oversight, and the Division of Clearing and Risk issued a No-Action Relief letter preserving the regulatory status quo with respect to provisions of the CEA that may apply to RTOs, ISOs, and/or their participants. The Commission is still considering comments regarding the Proposed Order to Exempt Specified Transactions Authorized by a Tariff or Protocol Approved by the Federal Energy Commission or the Public Utility Commission of Texas from Certain Provisions of the Commodity Exchange Act (77 FR 52137). The relief granted terminates upon the earliest of the Commission taking final action on the Proposed Order or March 31, 2013.
Section 4(c)(6); No-Action
12-11

Division of Clearing and Risk staff issued a no action preserving the regulatory status quo with respect to swaps cleared by a DCO (and related) collateral which expires on the compliance date for Part 22 regulations, November 8, 2012.
4d(f)(2), (3), (4), and (6); No-Action
12-10

The Division of Clearing and Risk granted an extension for compliance with Regulation 1.73(a)(1) for small exchanges and Regulation 1.73(a)(2)(iv)-(v) for automated screening of give-up and bunched orders, until June 1, 2013.

1.73(a)(2)(i), 1.73(a)(2)(iv), 1.73(a)(2)(v); No-Action

12-09

The Division of Clearing and Risk issued a letter interpreting Regulation 39.13(g)(8)(ii) (customer margin rule) to clarify that registered derivatives clearing organizations, in establishing customer initial margin requirements, may preserve historical practices by which customer initial margin requirements are based on the type of customer account and reflect the application of prudential standards that result in FCMs collecting customer initial margin at levels commensurate with the risk presented by each type of customer account.
Regulation 39.13(g)(8)(ii); Interpretation
12-08

The Division of Market Oversight issued an interpretation addressing whether, under Part 151 of the Commission’s regulations, an electric company may treat as bona fide hedging transactions certain derivative transactions that reduce the price risk associated with its unfilled anticipated requirements for natural gas, even though it has entered into some long-term, firm purchases of natural gas at an unfixed price.  The interpretation notes that unfilled anticipated requirements may be recognized as the basis of a bona fide hedging position or transaction under Commission Regulation 151.5(a)(2)(ii)(C) when a commercial enterprise has entered into long-term, unfixed-price supply or requirements contracts as the price risk of such “unfilled” anticipated requirements is not offset by an unfixed price forward contract as the price risk remains with the commercial, even though the commercial enterprise has contractually assured a supply of the commodity.  Instead, the price risk continues until the forward contract’s price is fixed; once the price is fixed on the supply contract, the commercial enterprise no longer has price risk and the derivative position, to the extent the position is above an applicable speculative position limit, must be liquidated in an orderly manner in accordance with sound commercial practices.
Meaning of “Unfilled Anticipated Requirements” for Purposes of Bona Fide Hedging; Interpretation
12-07

The staff of the Division of Market Oversight issued a no-action letter providing that, for a limited time, market participants can rely on the trade option exemption in CFTC regulation 32.3 without complying with specified provisions thereof. The no action letter is effective until the earlier of December 31, 2012, or the effective date of any final action taken by the Commission in response to comments on the Trade Option Exemption Interim Final Rules (77 FR 25320). To rely on the no-action relief, market participants must comply with: (1) the conditions for qualifying as a “trade option” (§ 32.3(a)); (2) speculative position limits (§ 32.3(c)(2)); and (3) prohibitions on fraud, manipulation and other abusive trade practices (§ 32.3(d)).
Regulation 32.3 Trade Options; No-Action
12-06

The Division of Market Oversight issued a letter to market participants providing temporary no-action relief in order to give effect to the Commission’s commitment to “coordinate the disposition” of a May 30, 2012 notice of proposed rulemaking regarding aggregation (“Aggregation Notice”) with the implementation of position limits under part 151 (“Position Limits Rule”), as well as “to provide an orderly transition to the compliance dates” for the Position Limits Rule. The no-action relief provides two alternative methods for compliance: (1) as if the Position Limits Rule were amended to include the provisions proposed in the Aggregation Notice; and (2) in conformity with the dis-aggregation criteria specified in the no-action relief. This temporary relief is intended to provide sufficient time for persons to transition to fully compliant aggregation by 60 days after the earlier of the date the Commission publishes a rule finalizing changes to the Commission’s aggregation policy or the date the Commission issues an order declining to take further action on the Aggregation Notice. The relief is time limited to no later than December 31, 2012.
Part 151: Position Limits for Futures and Swaps; No-Action
12-05

The Division of Market Oversight issued a letter to market participants providing temporary no-action relief for reporting by non-clearing member swap dealers under the CFTC’s large trader reporting system for physical commodity swaps and swaptions. This temporary relief is intended to provide sufficient time for non-clearing member swap dealers to transition to fully compliant reporting by 60 days after the Commission’s deadline for entities to apply to register as swap dealers. In addition, the letter provides a further six months of no-action relief to non-clearing member swap dealers that satisfy the conditions of Section 20.10(e) of the Commission’s regulations.

Part 20: Large Trader Reporting for Physical Commodity Swaps; No-Action

12-04

The Division of Swap Dealer and Intermediary Oversight (“the Division”) of the Commodity Futures Trading Commission (“CFTC”) today issued a notice of the availability of time-limited no action relief for commodity pool operators (“CPOs”) and commodity trading advisors (“CTAs”) who would have been exempt or excluded from registration but for the recent amendments to Regulations 4.13 and 4.5. The Division has determined not to recommend that the Commission take an enforcement action against CPOs or CTAs for failure to register as such until December 31, 2012, subject to certain requirements, including the filing of a notice with the Division. Once filed, this no-action relief is effective immediately.

Part 4: Registration and Compliance Obligations for CPOs and CTAs; No-Action
12-03

The Division of Market Oversight issued a letter to market participants providing temporary no-action relief for less than fully compliant reporting of positions based on ownership under the CFTC’s large trader reporting system for physical commodity swaps and swaptions. This temporary relief is intended to provide sufficient time for the industry to transition to fully compliant reporting for positions based on ownership by July 27, 2012. As a condition of this relief, market participants must submit, by July 30, 2012, fully compliant reports dating back to July 2, 2012.

Part 20: Large Trader Reporting for Physical Commodity Swaps; No-Action
12-02