September 14, 2016

CFTC Staff Announces that Yieldbroker Pty Limited Qualifies for No-Action Relief in Connection with CFTC No-Action Letter No. 15-29

Washington, DC — The U.S. Commodity Futures Trading Commission’s (CFTC) Divisions of Market Oversight (DMO) and Swap and Intermediary Oversight (DSIO) today announced that Yieldbroker, a multilateral swaps trading facility that is licensed and regulated in Australia, has qualified for no-action relief in connection with CFTC No-Action Letter No. 15-29 (see Qualified Australian Licensed Market Letter or QALM Letter under Related Links). This makes Yieldbroker the first foreign-regulated, multilateral swap trading facility that permits direct access to U.S. persons to qualify for long-term no-action relief from the requirement to register as a swap execution facility (SEF) with the CFTC.

Yieldbroker is licensed as an exchange under an Australian Market License and is regulated by the Australian Securities & Investments Commission (ASIC). It operates a multilateral trading platform in Australia which brings together multiple third-party buying and selling interests in swaps. Yieldbroker currently permits direct access to U.S. persons to transact in swaps on its platform, and has operated pursuant to several DMO no-action letters issued since 2013.

On May 15, 2015, DMO and DSIO jointly issued the QALM Letter, which invites swaps trading facilities that are licensed in Australia and overseen by ASIC to apply for long-term, no-action relief from the SEF registration requirement, and to apply on behalf of the facilities’ participants for no-action relief from the CFTC’s trade execution mandate as well as certain business conduct and documentation requirements for participants that are swap dealers and major swap participants.

Consistent with the requirements of the QALM Letter, Yieldbroker has certified that it is subject to sufficient pre- and post-trade price transparency requirements, provisions providing for a requisite level of non-discriminatory access by market participants, and appropriate governmental oversight in Australia. Yieldbroker has also certified that it will comply with certain reporting and clearing-related requirements as specified in the QALM Letter.

“The Yieldbroker relief letter is an important step in cross-border regulatory coordination for swaps trading,” said Vincent McGonagle, the CFTC’s Director of Market Oversight. Mr. McGonagle further commented that, “The relief issued today recognizes that where regulators share mutual interests in ensuring the integrity and transparency of swaps platforms, establishment of mutual deference may be justified based upon the comparative quality of the respective regulatory regimes.”

The QALM Letter relief will continue until the effective date of any CFTC exempt SEF framework adopted pursuant to CEA section 5h(g). The QALM Letter was modeled after CFTC No-Action Letter No. 14-46, which invited EU-regulated multilateral trading facilities (MTFs) to apply for similar, long-term no-action relief.

Last Updated: September 14, 2016