August 4, 2016

CFTC Announces Two Cross-Border Related Actions

Washington, DC — The U.S. Commodity Futures Trading Commission (CFTC) today announced two separate actions on how the rules related to the Dodd-Frank Wall Street Reform and Consumer Protection Act apply to cross-border transactions. Specifically, the CFTC issued a Final Response to District Court Remand Order in Securities Industry and Financial Markets Association, et al. v. United States Commodity Futures Trading Commission. Also today, the CFTC’s Divisions of Swap Dealer and Intermediary Oversight (DSIO), Clearing and Risk, and Market Oversight (Divisions) issued a time-limited no-action letter that extends relief, which was originally provided in November 2013 and subsequently extended, to swap dealers registered with the CFTC that are established under the laws of jurisdictions other than the United States from certain transaction-level requirements under the Commodity Exchange Act.

In the Securities Industry and Financial Markets Association case, the CFTC, in a decision issued by the United States District Court for the District of Columbia on September 16, 2014, prevailed in most respects on a challenge by industry groups to the CFTC’s authority to regulate cross-border swaps transactions.

The Court denied the plaintiffs’ demand that the CFTC be enjoined from enforcing extraterritorially Title VII of the Dodd-Frank Act and related regulations, and upheld the CFTC’s 2013 cross-border guidance document, the Interpretive Guidance and Policy Statement Regarding Compliance with Certain Swap Regulations.

The court did direct the CFTC to further explain and consider the costs and benefits of certain rules. Accordingly, in March 2015, the CFTC published an Initial Response to the Remand Order, which further explained the CFTC’s earlier consideration of costs and benefits of these rules and solicited comments. The CFTC received a number of comments and carefully considered all of them. Today’s release contains further consideration of costs and benefits and explains the CFTC’s approach to international harmonization of swaps regulations to carry out the Dodd-Frank reforms in cooperation with global regulators and to promote stable and healthy markets.

The no-action letter provides relief from certain transaction-level requirements with respect to activities addressed in a DSIO advisory issued November 14, 2013 (i.e., swaps arranged, negotiated, or executed in the United States). The relief is extended until the earlier of September 30, 2017 or the effective date of any CFTC action with respect to matters addressed by the DSIO advisory.

Last Updated: August 4, 2016