Regulatory Orders and Guidance

Meaning of “executing firm” clarified. The CFTC posted the Division of Clearing and Risk’s April 29, 2013 interpretive letter clarifying the term “executing firm.” The interpretation provides that the term, as used in Regulation 1.73(a)(2)(iv), refers to introducing brokers or futures commission merchants that execute orders for customers. Moreover, an FCM that provides to an executing firm sponsored access to a market is not obligated under Regulation 1.73(a)(2)(iv), by virtue of providing such access, to conduct order screening of the executing firm’s customers. (6/12/2013)

Legal Entity Identifiers. The CFTC issued an Amended Order expanding the list of Legal Entity Identifiers that can be used by registered entities and swap counterparties to comply with the agency’s swap data reporting regulations. (6/10/2013) CFTC press release.

Category 2 mandatory clearing. Commodity pools, private funds, and persons predominantly engaged in activities that are in the business of banking, or in activities that are financial in nature, were required to begin clearing certain credit default swaps and interest rate swaps executed on or after June 10, 2013. (6/10/2013) CFTC press release.

Clearing exemption for inter-affiliated entities. The CFTC’s Division of Clearing and Risk advised that the effective date of the final rule adopting the “Clearing Exemption for Swaps Between Certain Affiliated Entities” has been automatically extended to June 18, 2013.(6/7/2013) CFTC Advisory; CFTC press release.

Regulatory Relief

SEF temporary no-action relief. The CFTC’s Division of Market Oversight provided temporary no-action relief to entities that have been operating pre-Dodd Frank trading platforms. Under this no-action letter, a swap trading facility that wishes to avoid an interruption in operations on October 2, 2013, must as of that date be granted either temporary registration status as a SEF or be granted full registration status as either a Designated Contract Market or a SEF. (6/17/2013) CFTC press release.

No-action relief for small banks. The CFTC’s Division of Clearing and Risk issued a time-limited, no-action letter granting relief to banks, savings associations, farm credit system institutions, and credit unions having assets of less than US$10 billion, which are issuers of securities, from the board approval requirements of Section 2(j) of the Commodity Exchange Act and Commission Regulation 50.50. (6/10/2013) CFTC Letter No. 13-26.

End-user no-action letter. The CFTC’s Division of Clearing and Risk issued a letter stating that it will not recommend enforcement action against Corporación Andina de Fomento for failing to comply with the clearing requirement of Section 2(h)(1) of the Commodity Exchange Act. (6/10/2013) CFTC Letter No. 13-25.

No-action relief for cooperatives. The CFTC’s Division of Clearing and Risk issued a time-limited no-action letter granting relief from required clearing under Section 2(h)(1)(A) of the Commodity Exchange Act and Part 50 of the CFTC’s regulations for certain swaps entered into by qualifying cooperatives. (6/7/2013) CFTC Letter No. 13-24.

Other Developments

Commissioner proposes compromise. CFTC Commissioner Bart Chilton suggested ways in which a compromise might be reached concerning the application of the CFTC’s cross-border swaps guidance. (6/13/2013) Compromise.