November 28, 2012

CFTC’s Division of Clearing and Risk Issues Time-Limited No-Action Relief from Required Clearing for Swaps entered into by Certain Cooperatives

Washington, DC – The Commodity Futures Trading Commission’s Division of Clearing and Risk (DCR) today announced the issuance of a time-limited, no-action letter granting relief from required clearing under section 2(h)(1)(A) of the Commodity Exchange Act and the Commission’s newly adopted Part 50 regulations for certain swaps entered into by qualifying cooperatives.

The no-action letter provides that DCR will not recommend an enforcement action for failure to clear a swap entered into by a cooperative if the cooperative and the swap meet certain conditions set forth in the no-action letter. To qualify for the no-action relief, one of the counterparties to the swap must be a cooperative whose members are either non-financial entities or cooperatives whose members are non-financial entities. In addition, the no-action relief only applies to swaps entered into in connection with originating loans to cooperative members or that are related to loans to, or swaps with, members.

The conditions are substantially similar to the conditions included in the proposed cooperative exemption rule published by the Commission in the Federal Register on July 17, 2012. The proposed rule is not yet final. This no-action relief will remain in effect until the earlier of April 1, 2013, or the effective date of a Commission rulemaking finalizing the proposed cooperative exemption.

Last Updated: November 28, 2012