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CFTC Issues Further Call to (No) Action

On 17 October 2013, the CFTC published No-Action Letter No. 13-64, which provides relief to certain non-US persons that are not guaranteed or conduit affiliates of US persons.

Under CFTC regulations , persons who are not currently registered as swap dealers are not required to register if the aggregate gross notional amount of their swap dealing activity remains below a de minimus level during the preceding 12 months. Previously, the CFTC’s policy had been to allow non-U.S. persons that are not guaranteed or conduit affiliates of U.S. persons (each a “Relevant Party”) not to count toward their de minimis thresholds their swap dealing transactions with, among others:

  • a guaranteed affiliate of a U.S. person that is a swap dealer, or
  • a guaranteed or conduit affiliate that is not a swap dealer and itself engages in de minimis swap dealing activity and which is affiliated with a swap dealer.

The CFTC has agreed to extend this relief and will not take enforcement action against any Relevant Party for failure to include in its de minimis calculation a swap executed with a guaranteed affiliate of a U.S. person on or before the date such non-U.S. person is required to register as a swap dealer, provided that:

  • the guaranteed affiliate is affiliated with a swap dealer;
  • the guaranteed affiliate has crossed the de minimis threshold; and
  • the guaranteed affiliate represents in writing (with a copy required to be sent to the CFTC no later than 48 hours after execution of such swap) that:
    • such guaranteed affiliate intends to register as a swap dealer; and
    • the date its registration is required pursuant to CFTC rules.
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