CFTC Gives Non-US Swaps Trading Platforms More Time to Comply with Dodd-Frank SEF Rules | Practical Law

CFTC Gives Non-US Swaps Trading Platforms More Time to Comply with Dodd-Frank SEF Rules | Practical Law

The CFTC extended to May 15, 2014 the deadline for multilateral trading facilities (MTFs) to comply with Dodd-Frank rules for swap execution facilities (SEFs). MTFs are non-US swaps trading platforms that must comply with Dodd-Frank swaps rules if they offer swaps to US persons.

CFTC Gives Non-US Swaps Trading Platforms More Time to Comply with Dodd-Frank SEF Rules

by Practical Law Finance
Published on 26 Mar 2014 • USA (National/Federal)
The CFTC extended to May 15, 2014 the deadline for multilateral trading facilities (MTFs) to comply with Dodd-Frank rules for swap execution facilities (SEFs). MTFs are non-US swaps trading platforms that must comply with Dodd-Frank swaps rules if they offer swaps to US persons.
On March 21, 2014 the CFTC's Division of Market Oversight (DMO) issued No-action Letter 14-31 (No-action 14-31), which extends the deadline for multilateral trading facilities (MTFs) to comply with Dodd-Frank rules for swap execution facilities (SEFs) until May 15, 2014. MTFs are non-US swaps trading platforms that must comply with Dodd-Frank swaps rules if they offer swaps to US persons. The CFTC had previously issued two no-action letters to provide short-term relief to MTFs, which expired on March 24, 2014 (see Legal Update, CFTC and European Commission Agree on Swap Exchange Trading). No-action 14-31 extends relief to both:
  • MTFs overseen by competent authorities designated by European Union member states from Dodd-Frank SEF registration requirements under section 5h(a)(1) of the CEA.
  • Parties executing swap transactions on or pursuant to the rules of MTFs from the Dodd-Frank mandatory trade execution mandate required under section 2(h)(8) of the CEA. This means that, until May 15, 2014, US persons continue to enter into swaps that are subject to Title VII's mandatory exchange-trading requirement (see Legal Update, MAT Summary: CFTC Swap Exchange-trading Mandates and Effective Dates) on MTFs that have not registered as SEFs with the CFTC.
The DMO and the CFTC's Division of Swap Dealer and Intermediary Oversight (DSIO) plan to issue a replacement long-term no-action letter that will provide conditional long-term relief for MTFs from Dodd-Frank rules. The DMO is providing the current extension to allow MTFs and parties executing transactions on or pursuant to the rules of MTFs to consider clarifications and amended conditions that will be featured in the replacement long-term no-action letter that will be necessary to gain a longer-term exemption from Dodd-Frank rules.
The DMO recommends that MTFs that anticipate requesting relief under the replacement long-term no-action letter should submit their requests by May 1, 2014 in order to secure seamless relief from SEF requirements and trade execution requirements. This planned forthcoming no-action relief will supersede previous MTF no-action letters, but will generally provide similar relief to MTFs from requirements to register under CFTC rules, provided conditions are met.
The relief provided under No-action 14-31 will expire on the earlier of:
  • The DMO's issuance of a letter acknowledging receipt of and granting a relief request to an MTF pursuant to the forthcoming replacement long-term no-action letter.
  • May 14, 2014.