October 12, 2012

CFTC’s Division of Swap Dealer and Intermediary Oversight Issues Time-Limited No-Action Letter Regarding the Treatment of Agricultural and Exempt Commodities in Making Calculations for Purposes of the Swap Dealer and Major Swap Participant Definitions

Washington, DC — The Commodity Futures Trading Commission’s Division of Swap Dealer and Intermediary Oversight (DSIO) today issued a no-action letter regarding the treatment of agricultural and exempt commodities in making calculations for purposes of the swap dealer and major swap participant definitions.

In order to provide participants in the market for swaps referencing agricultural and exempt commodities sufficient time to determine whether and in what manner to transition their current business practices to the new regulatory environment, and to enable any such transition to proceed in an orderly manner, DSIO staff issued the no-action letter to afford market participants a short period of additional time to evaluate the various staff documents issued recently and adjust their business practices accordingly. DSIO staff believes that this limited transitional no-action relief will further the Commission’s stated objective to “ensure that market practices will not be unduly disrupted during the transition to the new regulatory regime.”

The no-action letter states that DSIO will not recommend that the Commission 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 Commission 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, or for failure to include, in its calculation of daily average aggregate uncollateralized outward exposure and daily average aggregate potential outward exposure for purposes of Commission 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.

Last Updated: October 12, 2012