Statement of CFTC Chairman Timothy Massad regarding 30 Day No-Action Relief from Compliance with Custodial Arrangement Requirements under CFTC Uncleared Swap Margin Rules

September 1, 2016

Today is the first compliance date for our rules requiring margin for uncleared swaps, which generally covers transactions between swap dealers. CFTC staff has been made aware that some dealers have not been able to complete all documentation required to comply with the custodial arrangements required by CFTC rules, due to the limited number of providers of such services and the volume of custodial agreements that market participants are requesting. While it is staff's understanding that this situation has improved in the last few days,‎ and that the largest dealers may no longer face significant issues, staff has heard that smaller firms or foreign firms may not have been able to complete all arrangements or test these new facilities.

In light of these circumstances, I support the no-action position taken by the Division of Swap Dealer and Intermediary Oversight (DSIO) that it will not recommend an enforcement action against a swap dealer subject to the September 1, 2016 compliance date for the CFTC’s uncleared swap margin rules, for failing to fully comply with the CFTC’s custodial arrangement requirements during the initial 30 days of implementation. This is the case provided that a swap dealer is still collecting and posting margin, working in good faith to complete such arrangements, and meeting certain other requirements. This limited relief should help minimize the risk of problems due to any difficulty in arranging such services.

I appreciate the efforts of firms to prepare for these new rules. I also want to thank the CFTC staff for their continued work on this issue. I remain committed to working with all market participants throughout this implementation period.

Last Updated: September 1, 2016