On October 7 2016 the Commodity Futures Trading Commission (CFTC) Division of Market Oversight extended time-limited no-action relief to swap execution facilities from certain requirements in the definition of 'block trade' in CFTC regulations.(1)

Specifically, CFTC Regulation Section 43.2 defines a 'block trade' as, among other things, a publicly reportable swap transaction that occurs away from the registered swap execution facility's (SEF) or designated contract market's (DCM) trading system or platform and is executed pursuant to the registered SEF's or DCM's rules and procedures.

Subject to certain conditions, the no-action letter extends time-limited relief to SEFs from the 'occurs away' requirement under Section 43.2 until November 15 2017 before 11:59 pm, Eastern Standard Time, or the effective date of any CFTC action with respect to the issues discussed in this no-action letter.

Among other things, the extension will allow the Dvision of Market Oversight to continue to evaluate best practices and a more permanent solution to the issues involved in screening block trade orders for compliance with risk-based limits, including, if appropriate, amendments to CFTC regulations. Parties to a swap that do not use the SEF functionalities which this letter provides must ensure that the required pre-execution credit check occurs.

For further information on this topic please contact Donna M Parisi, Geoffrey B Goldman or Azam H Aziz at Shearman & Sterling LLP by telephone (+1 212 848 4000) or email ([email protected],[email protected] or [email protected]). The Shearman & Sterling website can be accessed at www.shearman.com.


(1) The CFTC staff letter is available at www.cftc.gov/idc/groups/public/@lrlettergeneral/documents/letter/16-74.pdf.