December 31, 2013

CFTC’s Division of Market Oversight Issues Time-Limited No-Action Relief Relating to Certain CDS Clearing-Related Swaps Executed Pursuant to a CDS Settlement Price Process

Washington, DC — The U.S. Commodity Futures Trading Commission’s (Commission) Division of Market Oversight (Division) today issued a no-action letter providing time-limited relief relating to certain occasional, off-facility, cleared credit default swaps (CDSs) that are entered into pursuant to a DCO’s rules related to its price submission process for determining end-of-day settlement prices for cleared CDSs (for the purposes of this relief, this settlement price process is referred to as the “CDS Settlement Price Process,” and the swaps associated with this process are referred to as “Clearing-Related Swaps”).

This no-action letter provides that the Division will not recommend that the Commission take enforcement action against a DCO for failure to register as a SEF pursuant to CFTC Regulation 37.3, or any DCO clearing member for entering into a swap through the DCO’s CDS Settlement Price Process and not on a SEF or a DCM for CDS Clearing-Related Swaps, even if such swap is subject to CEA Section 2(h)(8)’s trade execution requirement. The relief provided in this letter would be available to any DCO that executes CDS Clearing-Related Swaps pursuant to its CDS Settlement Price Process and all clearing members that enter into a CDS Clearing-Related Swap, subject to the conditions specified.

Additionally, this letter extends the relief provided by the Division (under CFTC Letters Nos. 12-59 and 13-36) in connection with the reporting requirements of Part 45, allowing the DCO to fulfill all of the reporting counterparty’s obligations with respect to reporting certain CDS trades executed pursuant to a CDS Settlement Price Process. The Division will not recommend that the Commission take enforcement action against a reporting counterparty for failure to comply with its obligations to report swap data as required by part 45 for CDS Clearing-Related Swaps, subject to the conditions specified in the letter.

All no-action relief provided by this letter will expire on September 30, 2014.

Last Updated: December 31, 2013