June 26, 2013

CFTC’s Division of Swap Dealer and Intermediary Oversight Issues No-Action Relief from Certain External Business Conduct Standards and Documentation Standards

Washington, DC — The Commodity Futures Trading Commission’s Division of Swap Dealer and Intermediary Oversight (DSIO) today announced the issuance of a no-action letter relating to certain duties imposed on swap dealers (“SDs”) and major swap participants (“MSPs”) pursuant to the Commission’s Business Conduct Standards with Counterparties (“External BCS”), as well as certain documentation requirements imposed on SDs and MSPs pursuant to Commission regulation § 23.504.

As defined in the letter, an “Intended-To-Be-Cleared Swap” (“ITBC Swap”) is one which is intended to be submitted for clearing contemporaneously with execution of such swap. Subject to certain conditions, in the context of an ITBC Swap where the SD or MSP does not know the identity of the counterparty to the ITBC Swap prior to execution (an “Anonymous ITBC Swap”), the letter provides relief for SDs and MSPs with respect to those External BCS requirements that are specified in Appendix A to the letter and the swap trading relationship documentation requirement under Commission regulation § 23.504. In addition, the letter provides, subject to conditions, relief for SDs and MSPs with respect to the swap trading relationship documentation requirement under Commission regulation § 23.504 in the context of an ITBC Swap where the SD or MSP knows the identity of the counterparty.

The no-action letter is applicable to all SDs and MSPs. Additionally, to rely on the relief provided in the no-action letter, an SD or MSP must first enter into a fallback agreement, as defined in the letter, with the applicable counterparty (or its duly authorized representative) which meets the conditions of the letter.

Last Updated: June 26, 2013