April 9, 2014

CFTC’s Divisions of Market Oversight and Swap Dealer and Intermediary Oversight Provide Conditional No-Action Relief with Respect to Swaps Trading on Multilateral Trading Facilities Overseen by Authorities Designated by European Union Member States

Washington, DC — The Commodity Futures Trading Commission’s (CFTC) Divisions of Market Oversight (DMO) and Swap Dealer and Intermediary Oversight (DSIO) today announced the joint issuance of CFTC No-Action Letter No. 14-46 (No-Action Letter 14-46), replacing CFTC No-Action Letter No. 14-16 (No-Action Letter 14-16), which DMO and DSIO issued on February 12, 2014.

No-Action Letter 14-16 provided no-action relief for:

  • Qualifying MTFs from the SEF registration requirement;
  • Parties executing swap transactions on qualifying MTFs from the trade execution mandate; and
  • Swap dealers and major swap participants executing swap transactions on qualifying MTFs from certain business conduct requirements.

Subsequent to the issuance of No-Action Letter 14-16, CFTC staff continued to engage in dialogue with the staffs of the European Commission and the Financial Conduct Authority of the United Kingdom, as well as with facility operators and market participants, concerning certain terms and conditions in No-Action Letter 14-16.

As a result of these conversations, and seeking to build upon the significant progress achieved to date towards harmonizing a regulatory framework for CFTC-regulated swap execution facilities (SEFs) and EU-regulated multilateral trading facilities (MTFs), CFTC staff today issued No-Action Letter 14-46, which generally tracks the conditional relief provided in No-Action Letter 14-16. However, No-Action Letter 14-46 features several notable clarifications, as well as new and amended conditions including, but not limited to, the following items:

  • An MTF must report all swap transactions to a Commission-registered or provisionally-registered swap data repository as if it were a SEF, in compliance with parts 43 and 45 of the Commission’s Regulations, as a condition subsequent to qualifying for relief;
  • An MTF must certify that it is subject to and compliant with regulations that require all MTF participants to consent to the MTF’s jurisdiction, thereby enabling the MTF to effectively enforce its rules;
  • Qualifying MTFs must submit monthly reports to CFTC staff summarizing levels of participation and volume by U.S. persons; and
  • Clarifications regarding the reporting obligations for counterparties to swap transactions executed on or pursuant to the rules of a qualifying MTF.

CFTC staff believes that the revisions included in No-Action Letter 14-46 are consistent with the commitments made by the CFTC in the CFTC-EC Path Forward statement and the spirit of international cooperation evidenced by that document.

Issuance of No-Action Letter 14-46 was preceded by issuance of CFTC No-Action Letter No. 14-31, which provides additional time for MTFs to comply with the conditions for obtaining relief under No-Action Letter 14-46, and for DMO to consider certifications made by MTFs pursuant to No-Action Letter 14-46. The short-term no-action relief provided by CFTC No-Action Letter No. 14-31 will expire on May 14, 2014.

Last Updated: April 9, 2014