On May 16, the Commodity Futures Trading Commission’s Division of Swap Dealer and Intermediary Oversight (DSIO) provided no-action relief for certain non-US persons from counting swaps with international financial institutions, such as the International Monetary Fund, that are incorporated or based in the United States in determining swap dealer and major swap participant status as specified by the CFTC’s definitions.
The Interpretive Guidance and Policy Statement Regarding Compliance with Certain Swap Regulations, issued by the CFTC in 2013, generally requires a non-US person to count swap activity with US person counterparties in determining whether it meets the criteria for swap dealer or major swap participant registration. To the extent an international financial institution is incorporated in the United States, or has its principal place of business in the United States, it could be deemed a US person with respect to the above-mentioned guidance. However, DSIO’s position in the no-action letter indicates that it would not recommend enforcement action against a non-US person that is neither a guaranteed affiliate nor a conduit affiliate of a US person if it excludes swaps entered into with international financial institution counterparties in determining whether it is a swap dealer or a major swap participant. The rationale for relief expressed in the no-action letter also would logically support relief for US persons from having to count swaps with international financial institutions, but the letter does not address that situation.
The no-action letter is available here.