CFTC Staff Letters

The Division will grant the above time-limited no-action relief from the requirements for SEFs to capture post-trade allocation information in their audit trail data and to conduct associated audit trail reviews of post trade allocations, and will not recommend that the Division take enforcement action against any SEF that does not capture post-trade allocations in its audit trail data or conduct associated audit trail reviews of post trade allocations, as required by Commission regulations 37.205(a) and (b)(2).

ISDA indicates that the industry should be able to review all swaps within 10 minutes after execution by May 1, 2016. Other industry participants have indicated that they should be able to do so by August 1, 2016. Therefore, the AQATP standard may be met if trades are routed to and received by the relevant DCO no more than 10 minutes after the execution of the trade, effective on August 1, 2016 and thereafter. Staff notes that the reporting obligations of SEFs and DCMs contained in Regulations 43 and 45 are not affected by this letter. In particular, a SEF or DCM must report a swap transaction to the appropriate Swap Data Repository as soon as technologically practicable after execution of the swap in accordance with Regulations 43.3 and 45.3 regardless of when the swap is submitted for clearing.Market participants should be aware that the positions taken herein do not excuse affected persons from compliance with any other applicable requirements of the CEA or the Commission’s regulations thereunder, in particular, the applicable swap data reporting requirements, clearing requirements, pre-execution credit check requirements, and straight-through processing requirements.

Proper reporting of swaps is an important obligation of SDs and MSPs. Firms should ensure that they have the systems and controls to properly report and to timely identify and correct any errors. Firms should periodically test their systems to ensure that the information is being properly transmitted. Further, any changes in systems that could have an effect on proper reporting should be tested and verified prior to any such changes.

As the Commission continues to consider the issues in the Proposed Amendment, the Divisions believe an extension of the no-action relief in CFTC Staff Letter No. 14-147 is warranted. Accordingly, with respect to Regulation 1.35(a), the Divisions will not recommend an enforcement action against a CTA that is a member of a DCM or of a SEF for failure to maintain records of oral communications and will not recommend an enforcement action against a market participant subject to Regulation 1.35(a) on the grounds that its records of oral and written communications that lead to the execution of a transaction are not linked to or otherwise identified with a particular transaction.

Wells Fargo requests no-action relief permitting the London Branch and its counterparties to comply with the relevant requirements applicable to its Foreign Clients in lieu of the Commissions Transaction-Level Requirements. Wells Fargo requests the no-action relief only with respect to swaps between the London Branch and its Foreign Clients. Based on the foregoing and the representations made by Wells Fargo, the Divisions believe that granting no-action relief is warranted.

The purpose of this letter is to extend no-action relief previously granted by the Division of Clearing and Risk (Division) of the Commodity Futures Trading Commission (Commission) under No-Action Letter 14-135 that addressed certain challenges faced by market participants arising from the fact that other jurisdictions are still in the process of implementing mandatory clearing regimes.

On November 7, 2014, in response to a request from ISDA similar to that previously received,6 the Division issued CFTC Letter No. 14-136 extending the relief granted in CFTC Letter No. 14-26 until December 31, 2015. The Division explained that the rationale for relief was unchanged and it needed additional time to assess whether the relief should be permanent. On August 31, 2015, ISDA again requested that the Commission exercise its authority pursuant to CEA section 4(c) to establish a permanent exemption for inter-affiliate swaps from the trade execution requirement under CEA section 2(h)(8). To allow time for the Commission to consider the request, ISDA requested that the Commission further extend the relief granted in CFTC Letter No. 14-26. The Division has determined to extend the no-action relief granted by CFTC Letter No. 14-26 until 11:59 p.m. (Eastern Time) December 16, 2016.

As noted in the Request Letter, the Commission has not yet issued comparability determinations as to whether the regulatory requirements of any foreign jurisdiction are comparable to and as comprehensive as the applicable requirements under the Commodity Exchange Act and Commission regulations with respect to the SDR Reporting Rules.5 While review of those requests for comparability determinations that have been received by the Commission continues, the Division believes that it would be appropriate to provide an extension of the time-limited no-action relief provided in CFTC Letter No. 14-141.

The Division agrees that SEFs can facilitate the pre-trade credit checks that are required for FCMs and SEFs to comply with §§1.73 and 37.702(b), respectively. The Division has determined to extend the no-action relief provided in No-Action Letter 14-118.

Relief from the audit requirement of Commission regulation 4.22(d) for A with respect to B. You request on behalf of A, the commodity pool operator (the CPO) for B (the Pool), relief from the requirement in Commission regulation 4.22(d) to have an independent public accountant audit the financial statements in the Pools annual report for fiscal year 2014.