The Division of Clearing and Risk of the Commodity Futures Trading Commission has extended the expiration date for relief granted in an earlier no-action letter from the swap clearing requirement under Section 2(h) of the Commodity Exchange Act (CEA) and CFTC Regulation 50.4 for certain swaps and certain cooperatives until the earlier of August 16 or the effective date of a final rulemaking on the cooperative exemption. In order to qualify for such no-action relief, one of the counterparties to a swap transaction must be an “exempt cooperative.” An exempt cooperative is a cooperative that, subject to certain exceptions, (i) is formed and existing pursuant to federal or state law as a cooperative, and (ii) is a “financial entity” solely because of Section 2(h)(7)(C)(i)(VIII) of the CEA. Additionally, the swap (either a credit default swap or an interest rate swap) must be entered into by a member of an exempt cooperative in connection with originating a loan for such member or to hedge or mitigate commercial risk associated with loans to members of an exempt cooperative. The proposed cooperative rulemaking includes an exemption from the clearing requirements substantially similar to the no-action relief provided in the no-action letter.

CFTC Letter No. 13-47 is available here.