Release Number 7935-19

June 6, 2019

CFTC Staff Issues No-Action Relief from Uncleared Swap Margin Rule for Certain Amendments to Legacy Swaps

— The Commodity Futures Trading Commission’s (CFTC) Division of Swap Dealer and Intermediary Oversight (DSIO) today announced it will provide no-action relief to permit certain amendments to legacy swaps without losing their status as legacy swaps. 

“Today’s relief provides market certainty with respect to a number of amendments and life-cycle events swap dealers routinely encounter in swap portfolios with counterparties they serve,” said DSIO Director Matthew Kulkin.  “Further, the relief for swaps resulting from compression of legacy swap portfolios will permit swap dealers to proceed with an important risk management function.”

“Legacy swap” means a swap executed prior to the applicable compliance date for the CFTC’s uncleared swap margin rule.  Legacy swaps are outside the scope of the CFTC uncleared swap margin rule.

The no-action relief provided by the letter would permit swap dealers to continue to treat as legacy swaps (i) legacy swaps that are amended in an immaterial manner, (ii) a swap resulting from the exercise of a swaption that is itself a legacy swap, (iii) the remaining portion of a swap following a partial termination of such legacy swap, (iv) the remaining portion of a swap following a partial novation of such legacy swap, and (v) new swaps resulting from a multilateral compression exercise consisting solely of legacy swaps.