On 16 September 2013, ISDA published its “Cross-Border Swaps Representation Letter for US Banks” (the “Representation Letter”). The Representation Letter is designed to assist market participants comply with the provisions of the “Interpretive Guidance and Policy Statement Regarding Compliance with Certain Swap Regulations” published by the CFTC on 26 July 2013. This describes the circumstances in which the CFTC will assert jurisdiction over swap transactions that have a non-US element, including in relation to transactions entered into by non-US branches of US banks.
The Representation letter allows a US bank to make representations to its counterparties regarding its status, specifically:
- whether a transaction is deemed to be entered into with a non-U.S. branch of such U.S. bank under the Interpretive Guidance, and
- whether the bank satisfies requirements for a “safe harbour” and is therefore able to comply with the local law of the branch in lieu of the CFTC’s “Transaction-Level Requirements.”