CFTC Extends Further Relief from Transaction-Level Requirements to Non-US Swap Dealers for Swaps Arranged, Negotiated, or Executed in the US | Practical Law

CFTC Extends Further Relief from Transaction-Level Requirements to Non-US Swap Dealers for Swaps Arranged, Negotiated, or Executed in the US | Practical Law

The CFTC extended no-action relief previously granted to non-US swap dealers from certain transaction-level requirements under Title VII of the Dodd-Frank Act for swaps entered into with non-US persons that are not guaranteed affiliates or conduit affiliates of a US person when that swap is arranged, negotiated, or executed within the US.

CFTC Extends Further Relief from Transaction-Level Requirements to Non-US Swap Dealers for Swaps Arranged, Negotiated, or Executed in the US

by Practical Law Finance
Published on 11 Aug 2016 • USA (National/Federal)
The CFTC extended no-action relief previously granted to non-US swap dealers from certain transaction-level requirements under Title VII of the Dodd-Frank Act for swaps entered into with non-US persons that are not guaranteed affiliates or conduit affiliates of a US person when that swap is arranged, negotiated, or executed within the US.
On August 4, 2016, the CFTC released CFTC No-Action Letter 16-64 (No-Action 16-64), which extended until September 30, 2017 no-action relief previously granted to non-US swap dealers (SDs) from certain transaction-level requirements under Title VII of the Dodd-Frank Act for swaps entered into with non-US persons that are not guaranteed affiliates or conduit affiliates of a US person when that swap is arranged, negotiated, or executed within the US (such swaps referred to as "covered transactions").
No-Action 16-64 provides an extension of the no-action relief provided in CFTC No-Action Letter 15-48, which granted relief to non-US SDs from complying with transaction-level requirements under Title VII of the Dodd-Frank Act when entering into swaps with a counterparty that is not a US person (see Legal Update, CFTC Continues Relief from Dodd-Frank Rules for Non-US Swaps Arranged, Negotiated or Executed in the US).
No-Action 16-64 recommends that the CFTC grant relief to non-US SDs for failure to comply with:
  • All transaction-level requirements for a covered transaction if the swap is with a non-US SD not registered with the CFTC.
  • All transaction-level requirements for a covered transaction if the swap is with a non-US SD registered with the CFTC except:
Therefore, a swap with a non-US SD registered with the CFTC must comply with CFTC multilateral portfolio compression requirements and swap trading relationship documentation requirements.
Transaction-level requirements include:
  • Swap clearing and exchange trading.
  • Margin exchange and margin collateral segregation requirements for uncleared swaps.
  • Requirements regarding swap trading relationship documentation.
  • Mandatory trade execution requirements.
  • Real-time public swap data reporting requirements, swap data retention and maintenance of daily swap trading records.
  • Swap portfolio reconciliation and compression.
  • External business conduct (EBC) rules for swaps trading.
For more details on transaction-level requirements, see Practice Notes, The Dodd-Frank Act: Cross-Border Application of Swaps Rules: Transaction-Level Requirements and The Dodd-Frank Act: Internal Business Conduct (IBC) Rules for Swap Dealers and MSPs.
The relief under CFTC No-Action Letter 15-48 was scheduled to expire on September 30, 2016. This relief was previously extended in CFTC No-Action Letters 13-71, 14-01, 14-74 and 14-140 (see Legal Updates, CFTC Issues Relief from Recent Cross-border Swaps Advisory and Requests Public Comment, CFTC Extends Relief for Non-US Swap Dealers from Dodd-Frank Transaction-level Requirements and CFTC Further Extends Relief from Advisory on Transaction-level Requirements for Non-US Swap Dealers).