SPEECHES & TESTIMONY

Statement of Commissioner J. Christopher Giancarlo on the Fourth No-Action Letter Delay for Certain Package Transactions

October 14, 2015

The Division of Market Oversight has now delayed for the fourth time compliance with the trade execution requirement and required execution methods for certain package transactions. After four delays, the CFTC should admit that forcing certain complex package transactions to trade via SEFs’ limited execution methods for Required Transactions is simply not workable. As I have previously stated, the package transaction issue is an example of the CFTC’s misguided approach to SEF execution.

As a result, CFTC staff has engaged in a detailed no-action relief process for different categories of package transactions, gradually arriving upon a new “Permitted-Lite” set of execution methods in addition to the Required and Permitted methods.1 If the CFTC followed congressional direction that allows SEFs the flexibility to utilize methods of execution best matched to the existing way in which package transactions currently trade in global markets,2 this added no-action relief complexity could have been avoided and countless hours of CFTC resources could have been put to better use.

1 CFTC Letter No. 14-12, No-Action Relief from the Commodity Exchange Act Sections 2(h)(8) and 5(d)(9) and from Commission Regulation § 37.9 for Swaps Executed as Part of a Package Transaction (Feb. 10, 2014), available at http://www.cftc.gov/idc/groups/public/@newsroom/documents/letter/14-12.pdf; CFTC Letter No. 14-62, No-Action Relief from the Commodity Exchange Act Sections 2(h)(8) and 5(d)(9) and from Commission Regulation § 37.9 for Swaps Executed as Part of Certain Package Transactions and No-Action Relief for Swap Execution Facilities from Compliance with Certain Requirements of Commission Regulations § 37.9(a)(2), § 37.203(a) and § 38.152 for Package Transactions (May 1, 2014), available at http://www.cftc.gov/idc/groups/public/@lrlettergeneral/documents/letter/14-62.pdf; and CFTC Letter No. 14-137, Extension of No-Action Relief from the Commodity Exchange Act Sections 2(h)(8) and 5(d)(9) and from Commission Regulation § 37.9 and Additional No-Action Relief for Swap Execution Facilities from Commission Regulation § 37.3(a)(2) for Swaps Executed as Part of Certain Package Transactions (Nov. 10, 2014), available at http://www.cftc.gov/idc/groups/public/@lrlettergeneral/documents/letter/14-137.pdf.

2 See SEF definition CEA section 1a(50); 7 U.S.C. 1a(50).

Last Updated: October 14, 2015