U.S. COMMODITY FUTURES TRADING COMMISSION

Three Lafayette Centre

1155 21st Street, NW, Washington, DC 20581

Telephone: (202) 418-5000

Division of Swap Dealer and

Intermediary Oversight

Division of 

Market Oversight

Gary Barnett

Director

Vincent A. McGonagle

Director

CFTC Letter No. 14-60

No-Action

April 25, 2014

Division of Swap Dealer and Intermediary Oversight

Division of Market Oversight

Timothy W. Cameron, Esq.

Matthew J. Nevins, Esq.

Securities Industry and Financial Markets Association

120 Broadway, 35th Floor

New York, NY 10271

Re: Time-Limited No-Action Relief for Certain Members of Swap Execution Facilities 

and Designated Contract Markets from the Requirement to Record Oral 

Communications, Pursuant to Commission Regulation 1.35(a), in Connection with 

the Execution of Swap Transactions

Dear Messrs. Cameron and Nevins:

This letter is in response to a letter dated April 17, 2014, received by the Division of 

Swap Dealer and Intermediary Oversight (“DSIO”) and the Division of Market Oversight

(“DMO”) (collectively the “Divisions”) of the Commodity Futures Trading Commission 

(“Commission”) from the Asset Management Group of the Securities Industry and Financial 

Markets Association (“SIFMA”). In the letter, SIFMA seeks relief from the recordkeeping 

requirements of Commission Regulation (“Regulation”) 1.35(a), with respect to oral 

communications, to the extent that such requirements apply to Asset Managers1 that are 

members of a swap execution facility (“SEF”) or a designated contract market (“DCM”) in 

connection with the execution of swaps.

2

 1 While “Asset Manager” is not a registration category or defined term under the Commodity Exchange Act or the 

regulations promulgated pursuant thereto, SIFMA has defined the term broadly for purposes of the request for noaction relief to include certain persons who are required to register with the Commission (commodity pool operators 

and commodity trading advisors) as well as certain persons who are not required to register with the Commission.

2 Although SIFMA also requested relief from the written recordkeeping requirements of the Regulation, the 

Divisions find it appropriate, in this letter, to address the request for relief solely with respect to oral 

communications.
SIFMA AMG

Page 2

The Commission promulgated Part 1 of its regulations pursuant to the Commodity 

Exchange Act, 7 U.S.C. § 1 et seq. The Commission recently amended Regulation 1.35(a) in 

order to integrate the Regulation more fully with the new statutory framework for swaps created 

by the Dodd-Frank Wall Street Reform and Consumer Protection Act, Pub. L. 111–203, 124 

Stat. 1376 (2010), and to conform the existing recordkeeping requirements of Regulation 1.35(a) 

to the recordkeeping requirements for swap dealers and major swap participants, as set forth in 

Regulation 23.202. Regulation 1.35(a), as amended, states, in relevant part, that each member of 

a DCM or SEF “shall keep full, complete, and systematic records, which include all pertinent 

data and memoranda, of all transactions relating to its business of dealing in commodity interests 

and related cash or forward transactions.”3 As part of the systematic recordkeeping system that 

is required under Regulation 1.35(a), the Regulation states that:

“[I]ncluded among the records required to be kept by this paragraph are all oral 

and written communications provided or received concerning quotes, 

solicitations, bids, offers, instructions, trading, and prices that lead to the 

execution of a transaction in a commodity interest and related cash or forward 

transactions, whether communicated by telephone, voicemail, facsimile, instant 

messaging, chat rooms, electronic mail, mobile device, or other digital or 

electronic media.”4

Regulation 1.35(a) further states that the requirement to record oral communications shall not 

apply to certain enumerated persons, including commodity pool operators and members of a 

DCM or SEF that are not registered or required to be registered with the Commission in any 

capacity.

5

 Commodity trading advisors are not among the exempted entities. Affected entities 

were required to be compliant with the requirement to record oral communications by December 

21, 2013.

On December 20, 2013, the Divisions provided time-limited no-action relief from the 

requirement to record oral communications pursuant to Regulation 1.35(a) for commodity 

trading advisors that are members of SEFs.

6

 The Divisions believed that additional time was 

warranted given that SEFs had only recently begun publishing their rulebooks, and based on the 

requestors’ representations that Asset Managers needed more time to adjust their recordkeeping 

processes in order to be compliant with the recordkeeping requirements, as articulated in the SEF 

rulebooks and in Regulation 1.35(a).7 On March 21, 2014, the Divisions extended similar relief 

to commodity trading advisors that are members of trueEX, a DCM and temporarily registered 

 3 17 CFR 1.35(a)(1).

4 Id.

5 17 CFR 1.35(a)(1)(v), (viii).

6 See CFTC Letter No. 13-77, Time-Limited No-Action Relief for Certain Members of Swap Execution Facilities 

from the Requirement to Record Oral Communications Pursuant to Commission Regulation 1.35(a) (Dec. 20, 2013), 

available at: http://www.cftc.gov/ucm/groups/public/@lrlettergeneral/documents/letter/13-77.pdf.

7 Id. at 3.
SIFMA AMG

Page 3

SEF, with respect to the execution of swaps on the trueEX DCM. 8

 The relief was based on 

trueEX’s representations that providing relief solely to commodity trading advisors trading on 

SEFs would deter commodity trading advisors from accessing swaps listed for trading on the 

trueEX DCM.

9 The relief granted by the Divisions in the two no-action letters will expire on 

May 1, 2014.

On April 3, 2014, Commission staff held a “Public Roundtable to Discuss Dodd-Frank 

End-User Issues,” which included, among other things, a discussion of continuing concerns on 

the part of Asset Managers with respect to Regulation 1.35 compliance. In its April 17, 2014 

letter (submitted in connection with the Roundtable), SIFMA contends that the costs associated 

with requiring Asset Managers that are members of a DCM or SEF to comply with the written 

and oral recordkeeping requirements of the Regulation significantly outweigh the benefits. 

SIFMA seeks an exemption from all aspects of the Regulation on behalf of such Asset Managers, 

or pending further evaluation by the Commission, postponement of the compliance date until 

December 31, 2014. 

Given the issues raised by Asset Managers at the April 3, 2014 Roundtable and by 

SIFMA in its April 17, 2014 letter, the Divisions find it appropriate to grant relief to commodity 

trading advisors that are members of SEFs or DCMs with respect to the requirement to record 

oral communications in connection with the execution of swaps, in keeping with the prior relief 

granted by the Divisions in CFTC Letter Nos. 13-77 and 14-33. Accordingly, the Divisions will 

not recommend that the Commission take enforcement action against a commodity trading 

advisor that is a member of a SEF or a DCM for failure to comply, prior to December 31, 2014,

with the requirement under Regulation 1.35(a) to record oral communications in connection with 

the execution of swap transactions. 

This letter, and the positions taken herein, represent the views of the Divisions only, and 

do not necessarily represent the position or view of the Commission or of any other office or 

division of the Commission. As with all no-action letters, the relief issued by this letter does not 

excuse the affected persons from compliance with any other applicable requirements contained 

in the Act or in the Regulations issued thereunder. Further, this letter, and the relief contained 

herein, is based upon the information made available to the Divisions. Any different, changed or 

omitted material facts or circumstances might render this no-action relief void.

 8 See CFTC Letter No. 14-33, Time-Limited No-Action Relief for Certain Members of a Designated Contract 

Market from the Requirement to Record Oral Communications, Pursuant to Commission Regulation 1.35(a), in 

Connection with the Execution of Swap Transactions (Mar. 21, 2014), available at: 

http://www.cftc.gov/ucm/groups/public/@lrlettergeneral/documents/letter/14-33.pdf.

9 Id. at 3.
SIFMA AMG

Page 4

Should you have any questions, please do not hesitate to contact the undersigned. In the 

alternative, for DSIO issues, please do not hesitate to contact Frank Fisanich, Chief Counsel, at 

(202) 418-5949, Ward Griffin, Associate Chief Counsel, at (202) 418-5425, or Marcia Blase, 

Special Counsel, (202) 418-5138, and for DMO issues, please do not hesitate to contact Jonathan 

Lave, Associate Director, at (202) 418-5983.

Very truly yours,

Gary Barnett

Director

Division of Swap Dealer and Intermediary Oversight

Vincent A. McGonagle

Director

Division of Market Oversight

cc: Regina Thoele, Compliance

National Futures Association, Chicago

Jamila A. Piracci, OTC Derivatives

National Futures Association, New York