November 28, 2012

CFTC’s Division of Clearing and Risk Issues Time-Limited No-Action Relief from Required Clearing for Swaps between Affiliated Counterparties

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 affiliated counterparties.

The no-action letter provides that DCR will not recommend an enforcement action for failure to clear a swap entered into by affiliated counterparties if one of the counterparties to the swap is majority owned by the other counterparty or both counterparties are majority owned by a third party and the financial statements of both counterparties and the third party majority owner, if any, are reported for accounting purposes on a consolidated basis. In addition, both affiliates must agree not to clear the swap.

On August 21, 2012, the Commission published for public comment in the Federal Register a notice of proposed rulemaking to exempt swaps between two affiliated counterparties from required clearing. The proposed rule is not yet final. The 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 inter-affiliate clearing exemption rule.

Last Updated: November 28, 2012