On May 19, the Commodity Futures Trading Commission issued two no-action letters granting relief to certain swaps trading platforms in Australia and participants executing swaps transactions on such platforms.
In CFTC Letter No. 15-29, the CFTC’s Division of Market Oversight (DMO) and Division of Swap Dealer and Intermediary Oversight (DSIO) issued updated enabling no-action relief for qualifying swaps trading platforms that are licensed in Australia and regulated by the Australian Securities and Investments Commission (ASIC) (collectively referred to as “Qualifying Australian Licensed Markets”). The letter provides relief for: (1) Qualifying Australian Licensed Markets from the swap execution facility (SEF) registration requirement in Section 5h(a)(1) of the Commodity Exchange Act (CEA) and CFTC Regulation 37.3(a)(1); (2) parties executing swap transactions on Qualifying Australian Licensed Markets from the trade execution mandate in Section 2(h)(8) of the CEA and certain reporting obligations under Parts 43 and 45 of the CFTC Regulations; and (3) swap dealers and major swap participants executing swap transactions on Qualifying Australian Licensed Markets from certain business conduct requirements under subpart H to Part 23 of the CFTC Regulations, the confirmation requirement under CFTC Regulation 23.501 and the swap trading relationship documentation requirements under CFTC Regulation 23.504. The letter also clarifies and amends certain conditions of relief outlined in a prior no-action letter, including relaxed trading methodology and reporting requirements.
The no-action letter requires an Australian licensed market to certify to DMO that it will comply with the conditions set forth in the letter. Relief will begin when DMO reviews the applicant’s certification and issues a responsive relief letter. The no-action relief will expire upon the effective date of any final rules implementing the CFTC’s authority to exempt facilities that contain systems of comparable, comprehensive supervision and regulation by appropriate governmental authorities in the home country of the facility.
In CFTC Letter No. 15-30, DMO extended conditional time-limited relief to Yieldbroker Pty Limited, a multilateral trading platform that operates as a licensed exchange in Australia. Under the relief, DMO will not recommend enforcement action against Yieldbroker for failure to register as a SEF under Section 5h(a)(1) of the CEA or CFTC Regulation 37.3(a)(1) or against any market participant who uses or has relationships with Yieldbroker, so long as Yieldbroker: (1) offers trading only in products that are not subject to a trade execution mandate pursuant to Section 2(h)(8) of the CEA; (2) offers trading only in Australian dollar-denominated or New Zealand dollar-denominated interest rate swaps on its platform during the relief period; (3) maintains its anti-money laundering license and remains an exchange in good standing with ASIC; (4) provides impartial access to its platform consistent with the requirements of CFTC Regulation 37.202(a) and related CFTC guidance; (5) maintains an order book that complies with CFTC Regulation 37.3(a)(3); and (6) provides notice to its participants that each swap transaction executed on or pursuant to the rules of its platform during the relief period is not occurring on a registered SEF and that such counterparties may have swap data reporting obligations pursuant to Parts 43 and 45 of the CFTC Regulations. The relief conferred by Letter No. 15-30 expires October 15.