Exemption of Foreign Swap Trading Facilities from SEF Registration

Section 5h(a)(1) of the Commodity Exchange Act (CEA) prohibits the operation of a facility for the trading or processing of swaps unless the facility is registered as a swap execution facility (SEF) or as a designated contract market (DCM).

CEA section 5h(g) authorizes the Commission to grant an exemption from SEF registration if it determines that a foreign swap trading facility is subject to “comparable, comprehensive supervision and regulation on a consolidated basis” by the appropriate governmental authorities in the facility’s home country.

Foreign swap trading facilities that have been granted an exemption under CEA section 5h(g) can be used to execute swaps that are subject to the trade execution requirement under CEA section 2(h)(8). In addition, these “exempt SEFs” can offer trading in swaps that are not subject to the trade execution requirement to U.S. person counterparties that qualify as eligible contract participants.

An exemption under CEA section 5h(g) does not otherwise affect applicable requirements under the CEA and CFTC regulations.  In the CEA section 5h(g) exemptive orders that it has issued, the Commission has particularly highlighted certain requirements that continue to apply when transacting swaps on exempt SEFs.

Foreign Swap Trading Facilities Exempt from SEF Registration Requirement

The Commission has issued CEA section 5h(g) orders exempting from SEF registration certain swap trading facilities in the following jurisdictions:

European Union
Japan
Singapore

European Union

The following CEA section 5h(g) order, and amendment thereto, exempts certain multilateral trading facilities (MTFs) and organized trading facilities (OTFs) authorized in the European Union (EU) from SEF registration:

• Order of Exemption for Multilateral Trading Facilities and Organised Trading Facilities Authorized within the European Union(December 2017)
• Amendment to Appendix A to Order of Exemption for Multilateral Trading Facilities and Organised Trading Facilities Authorized within the European Union (December 2018)

• Second Amendment to Appendix A to Order of Exemption for Multilateral Trading Facilities and Organised Trading Facilities Authorized within the European Union and Amendment to Order of Exemption to Clarify the Application of the Order of Exemption to Multilateral Trading Facilities and Organised Trading Facilities Authorized within the United Kingdom during the Brexit Transition Period (July 2020)

• Third Amendment to Appendix A to Order of Exemption for Multilateral Trading Facilities and Organised Trading Facilities Authorized within the European Union (October 2022)

List of swap trading facilities within the EU covered by the Order of Exemption

 Japan

The following CEA section 5h(g) order exempts certain electronic trading platforms (ETPs) authorized in Japan from SEF registration:

• Order of Exemption for Electronic Trading Platforms Registered within Japan (July 2019)

List of swap trading facilities within Japan covered by the Order of Exemption

Singapore

The following CEA section 5h(g) order exempts certain approved exchanges (AEs) and recognised market operators (RMOs) authorized in Singapore from SEF registration:

• Order of Exemption for Approved Exchanges and Recognised Market Operators Authorized within Singapore (March 2019)

• Amendment to Appendix A to Order of Exemption for Approved Exchanges and Recognised Market Operators Authorized within Singapore from the Requirement to Register with the Commodity Futures Trading Commission as Swap Execution Facilities (October 2020)

• Second Amendment to Appendix A to Order of Exemption for Approved Exchanges and Recognised Market Operators Authorized within Singapore from the Requirement to Register with the Commodity Futures Trading Commission as Swap Execution Facilities (October 2022)

• Third Amendment to Appendix A to Order of Exemption for Approved Exchanges and Locally-Incorporated Recognised Market Operators Authorized within Singapore from the Requirement to Register with the Commodity Futures Trading Commission as Swap Execution Facilities (July 2024)

List of swap trading facilities within Singapore covered by the Order of Exemption