The CFTC recently granted no-action relief for Non-U.S. CPOs, CTAs and IBs seeking to rely upon the exemption provided in CFTC Rule 3.10(c)(3)(i). This Rule, which was revised after the Dodd-Frank Act to address swaps, exempts non-U.S. intermediaries such as CPOs, CTAs and IBs from CFTC registration provided: (i) the person is located outside of the U.S.; (ii) the person only acts on behalf of persons located outside the U.S.; and (iii) the commodity interest transaction (including swaps) is submitted for clearing through a registered FCM.
In their request for no-action relief, the parties represented that although they could meet the requirements of subsections (i) and (ii) set forth above, they could not meet the requirements of (iii) because the Commodity Exchange Act and CFTC Rules do not currently require all swaps to be cleared, and some swaps are not yet accepted for clearing by any DCO. In granting no-action relief, the CFTC recognized that its adoption of the exemption, as worded, was not intended to create an independent clearing requirement on transactions involving non-U.S. intermediaries that are not otherwise required to be cleared. The relief granted in the no-action letter is applicable to all intermediaries who would otherwise qualify for the exemption aside from subsection (iii) above.