The CFTC proposed amendments to CFTC Rules Part 36 ("Trade Execution Requirement"), Part 37 ("Swap Execution Facilities") and Part 43 ("Real-Time Public Reporting") to incorporate previously issued no-action relief.

The proposed amendments would, among other things:

  • permit swap components of certain categories under "package transactions" to be carried out on swap execution facilities through "flexible means of execution" rather than "required methods" (see CFTC Letter 17-55);

  • establish a "principles-based" approach for SEF error trade policies to allow for methods of execution other than those currently permitted under CFTC rules (see CFTC Letter 17-27); and

  • amend the definition of "block trade" to permit non-order book methods of execution to execute on-SEF block trades (See CFTC Letter 17-60).

Commissioner Comments

CFTC Commissioner Brian Quintenz said the proposal is an "important first step" in increasing regulatory clarity and facilitating increased market participation of SEFs. Chair Heath Tarbert highlighted the progress the proposal makes concerning centralized exchange type trading for swaps without hastening the "natural evolutionary process" of the market. Commissioner Rostin Behnam cautioned that the proposal may deviate from its original intent for codification, citing areas where the proposal deviates from existing no-action relief. Commissioner Dan Berkovitz said he "support[ed] the codification of no-action letters where, based on experience, doing so is consistent with [the CFTC's] statutory mandate, protects customers, provides market participants with a greater level of certainty, and promotes market integrity."

Comments must be submitted within 60 days after publication of the proposal in the Federal Register.