On May 1st, the date on which many of the External Business Conduct Standards rules went into effect for swap dealers ("SDs") and major swap participants ("MSPs") under the Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Dodd-Frank Act"), the Commodity Futures Trading Commission ("CFTC") issued a no-action letter providing relief from the requirement that SDs and MSPs disclose a pre-trade mid-market mark of certain swap transactions to their counterparties prior to entering into such transactions. There are two parts to the relief. The first is for transactions that are: (a) physically-settled FX swaps and forwards where each currency is one of the top 31 currencies listed in a report of the Bank for International Settlements on global foreign exchange market activity in 2010 (available here on page 12) ("BIS 31 Currencies") or (b) physically-settled vanilla FX options included among the BIS 31 Currencies where the option has a maturity of six months or less. Other conditions that must also be met include that real-time tradeable bid and offer prices must be made available electronically to the counterparty and that the counterparty must agree in advance in writing that the SD or MSP need not disclose the pre-trade mid-market mark. The second part of the relief issued in the letter provides that, for exempt FX transactions initiated on an electronic platform where the SD or MSP does not know the identity of the counterparty prior to execution of the swap and real-time tradeable bid and offer process for the exempt FX transactions are available electronically to the counterparty, the SD or MSP need not comply with the requirements set forth in Section 23.431 (a) and (b) of the Commodity Exchange Act regarding disclosure of material information concerning each swap and provision of scenario analysis. The no-action letter is available here.
 
A second no-action letter, issued on May 2nd, provides a further delay until September 1, 2013, with respect to the start date for compliance by SDs and MSPs with the External Business Conduct Standards rules for FX transactions with a settlement cycle of no more than seven business days, in order to provide market participants with the time needed to develop systems and processes to distinguish between FX spot transactions, FX forwards and other FX transactions, which many SDs and MSPs currently treat in the same way due to operational constraints. The May 2nd letter is available here.