On October 10th, 11th and 12th, the CFTC issued a series of no-action letters and interpretations designed to give swap market participants additional time to transition to the futures market and to the agency's new swap regulations. The no-action letters are:

  • Letter No. 12-10: Division of Clearing and Risk no-action letter preserving the regulatory status quo with respect to swaps cleared by derivatives clearing organizations and related collateral which expires on the compliance date for Part 22 regulations, November 8, 2012.
  • Letter No. 12-11 and Letter No. 12-12: The Division of Market Oversight, the DSIO, and the Division of Clearing and Risk no-action letters preserving the regulatory status quo with respect to provisions of the CEA that may apply to certain electrical utility companies.
  • Letter No. 12-13: The DSIO interpretive letter determining that equity real estate investment trusts that satisfy certain criteria are outside the definition of commodity pool as that term is defined in Section 1a(10) of the CEA and Commission Regulation 4.10(d). The requirements include deriving income primarily from the ownership and operation of real estate and using derivatives for the limited purpose of mitigating their exposure to changes in interest rates or fluctuations in currency; complying with applicable provisions of the Internal Revenue Code; and identifying itself as an equity REIT on applicable Internal Revenue Service forms. The relief is self executing.
  • Letter No. 12-14: The DSIO interpretative letter excluding certain securitization vehicles from the definition of commodity pool, subject to certain conditions.
  • Letter No. 12-15: The DSIO registration no-action positions. In the first position, DSIO announced that it will not recommend that the CFTC commence an enforcement action against any person who, solely by virtue of its swaps activity, would be required to register as an introducing broker, commodity pool operator, commodity trading advisor, associate person of any of the foregoing or of an futures commission merchant, floor broker or floor trader, provided that on or before December 31, 2012, the person applies for registration. In the second position, DSIO announced a similar registration no-action position for any person who finds themselves required to register solely because of their involvement with the transition of certain contracts on ICE and NYMEX to clearing as commodity futures and options, provided that on or before December 31, 2012, the person applies for registration. In the third position, DSIO announced a no-action position that will permit an SD or MSP to employ a person as an AP, notwithstanding that the person is subject to a statutory disqualification, provided that the SD or MSP requests and receives from the National Futures Association advice that, notwithstanding the disqualification, the person would have been granted registration as an AP. CFTC Press Release 6384-12.
  • Letter No. 12-16: The DSIO no-action letter providing that DSIO will not recommend that the CFTC take enforcement action against any person for failure to include, in its calculation of the aggregate gross notional amount of swaps connected with its swap dealing activity for purposes of CFTC Regulation 1.3(ggg)(4), a swap that (i) references an exempt commodity or agricultural commodity, (ii) is executed prior to December 31, 2012, and (iii) is either cleared on a derivatives clearing organization registered with the CFTC, or entered into contingent upon its being subsequently exchanged for and cleared as a futures position as part of an exchange for related position transaction conducted in accordance with a DCM's rules.
  • Letter No. 12-17: The Office of General Counsel interpretive letter regarding eligible contract participant status. CFTC Press Release 6385-12.
  • Letter No. 12-18: The DSIO no-action letter providing that it will not recommend that the CFTC commence an enforcement action against a non-financial entity that regularly transacts in the physical energy markets for failure to apply to be registered as a swap dealer if the entity's swaps dealing activities are no more than $800 million per year, are limited to publicly-owned, government-owned and federal agency utilities, and meet other requirements. CFTC Press Release 6386-12.
  • Letter No. 12-19: The DSIO interpretive letter clarifying the scope of the bona fide hedging exemption from the trading thresholds as applied to the operators of registered investment companies pursuant to Regulation 4.5. CFTC Press Release 6387-12.
  • Letter No. 12-20: The DSIO no-action letter advising that it will not recommend that the CFTC take enforcement action against any person for failure to include, in its calculation of the aggregate gross notional amount of swaps connected with its swap dealing activity for purposes of CFTC Regulation 1.3(ggg)(4), a swap that (i) references an exempt commodity or agricultural commodity, and (ii) is executed prior to October 20, 2012. The DSIO also will not recommend that the CFTC take enforcement action against any person for failure to include, in its calculation of daily average aggregate uncollateralized outward exposure and daily average aggregate potential outward exposure for purposes of CFTC Regulation 1.3(jjj)(4), such exposures arising from any swap that references an exempt commodity or agricultural commodity, from October 12, 2012, through October 20, 2012, inclusive. CFTC Press Release 6388-12.
  • Letter No. 12-21: The DSIO no-action letter providing time-limited, no-action relief from the obligation to include any foreign exchange swap or foreign exchange forward for purposes of determining if a person is a major swap participant, or the calculation to determine if an entity is a swap dealer if the Secretary of the Treasury determines at a later date to exempt such swaps or forwards from the definition of the term "swap" under the CEA. The letter also provides similar temporary no-action relief, for the same time period, for persons who would meet the definitions of the terms commodity pool operator and commodity trading advisor in the CEA solely as a result of their foreign exchange swap and foreign forward activity, from registration in those capacities. CFTC Press Release 6389-12.
  • Letter No. 12-22: The DSIO no-action letter providing that it will not recommend that the CFTC take enforcement action against certain foreign entities for failure to include a swap executed prior to the earlier of December 31, 2012, or the effective date of a definition of "U.S. person" in a final exemptive order, in its calculations required under the swap dealer and major swap participant definitions, so long as the counterparty to such swap does not fall within certain enumerated categories. The no-action letter also provides similar relief concerning certain swap transactions by certain foreign entities when the counterparty is a foreign branch of a person that falls within one of the enumerated categories and that intends to register as a swap dealer. See also CFTC Press Release 6390-12.