CFTC issues temporary relief non US based Swap Dealers


The CFTC has issued temporary no action relief until 14 Jan 2014 for Certain Transaction-Level Requirements (see below for full list) for Non-U.S. Swap Dealers.

This relief comes on the back of concerns raised regarding compliance with certain Transaction Level Requirements by overseas based Swaps Dealers (Non-US SD), who enter into swaps with a non-US person, where those swaps are regularly arranged, negotiated, or executed by personnel or agents of the Non-U.S. SD located in the United States.

Prior to the relief, such transactions required the Non-US SD counterparty to comply with transaction level requirements.

However, the Non-U.S. SDs argued that in order to avoid market disruption for their non-U.S. counterparties, additional time is necessary to allow them to organize their internal policies and procedures to come into compliance with the Transaction-Level Requirements when entering into what are called Covered Transactions.

Full details of the CFTC relief available here.

Note on The Transaction-Level Requirements: Note some requirements are yet to be implemented:

(i) required clearing and swap processing; (ii) margining (and segregation) for uncleared swaps; (iii) mandatory trade execution; (iv) swap trading relationship documentation; (v) portfolio reconciliation and compression; (vi) real-time public reporting; (vii) trade confirmation; (viii) daily trading records; and (ix) external business conduct standards. The Guidance classifies all Transaction-Level Requirements except external business conduct standards as “Category A” Transaction-Level Requirements, and classifies external business conduct standards as “Category B” Transaction-Level Requirements.

ELSEWHERE: There is much debate as to whether European EMIR regulations covering Organised Trading Facilities (OTF) will provide equivalence with SEFs under US Dodd Frank regulations. Henner Bruner of Capco has produced a great slide on the SEF vs OTF debate, which I have copied from a posting on OTCSpace, or here from Tabb Forum

SEF vs OTF

Slide by Capco: EU OTF vs US SEF

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