Release Number 8440-21

CFTC Staff Issues Temporary No-Action Letter to Non-Bank Swap Dealers Domiciled in Japan, Mexico, United Kingdom and the European Union

September 30, 2021

The Commodity Futures Trading Commission’s Market Participants Division today issued a temporary no-action letter to non-bank swap dealers (SDs) domiciled in jurisdictions that are the subject of pending Commission review for comparability determinations with respect to capital and financial reporting requirements.

As part of the capital and financial reporting requirements for SDs, the Commission adopted a substituted compliance framework to permit covered nonbank SDs to rely on compliance with their home country regulator’s capital and financial reporting requirements in lieu of meeting all or parts of the Commission’s capital adequacy and financial reporting requirements, provided the Commission finds such requirements comparable to the CFTC’s.

Through the no-action letter, CFTC staff is providing temporary no-action relief to 23 provisionally-registered Non-Bank SDs domiciled in Japan, Mexico, United Kingdom and the European Union, provided such SDs remain in compliance with existing home-country capital and financial reporting requirements and provide to the Commission certain financial information.

As the Commission continues to engage with foreign counterparts on the review of comparability requests, today’s temporary relief provides necessary regulatory certainty, which will not compromise the Commission’s oversight ability,” said Acting Chairman Rostin Behnam. “Our goal is to strike the appropriate balance in setting capital and financial reporting requirements for non-bank SDs dually-registered in our respective jurisdictions,” he continued.

Acting Chairman Behnam also indicated that in the coming months, the Commission anticipates publishing each of the four jurisdictions’ Capital Comparability Determinations for public comment, providing interested market participants and the public the opportunity to comment on the proposed determinations before they are finalized by Commission action.

“The Market Participants Division is working diligently to complete the review which requires significant analysis of differing regulatory structures and in some instances, translations of home-country requirements, particularly in the context of financial reporting,” said Acting Director Amanda Olear.    

The no-action letter was issued in response to a joint request received from the Securities Industry and Financial Markets Association, the Institute of International Bankers, and the International Swaps and Derivatives Association on behalf of their Non-Bank SD members who are otherwise required to comply by October 6, 2021 with the Commission’s newly adopted capital and financial reporting requirements. The relief granted by the letter will expire on the earlier of October 6, 2022 or the issuance by the Commission of a final Capital Comparability Determination with respect to each jurisdiction.