U.S. COMMODITY FUTURES TRADING COMMISSION

Three Lafayette Centre

1155 21st Street, NW, Washington, DC 20581

Telephone: (202) 418-5000

Facsimile: (202) 418-5521

www.cftc.gov

Division of Market Oversight

CFTC Letter No. 13-60

No-Action

September 30, 2013

Division of Market Oversight

Time-Limited No-Action Relief for Swap Execution Facilities and Designated Contract 

Markets from the One Business Day Product Review Period Requirement of Commission 

Regulation 40.2(a)(2) for Newly-Listed Swap Products

The Division of Market Oversight (“DMO”) of the Commodity Futures Trading 

Commission (“CFTC” or “Commission”) is issuing this letter to provide time-limited no-action 

relief for swap execution facilities (“SEFs”) and Designated Contract Markets (“DCMs”) from 

the one business day product review period requirement of Commission regulation 40.2(a)(2) for 

newly-listed swap products. This time limited no-action relief would commence on September 

30, 2013 and expire on October 3, 2013 or, if there is a federal government shutdown on that 

date, the first business day after the conclusion of such shutdown.1

I. Background

Under section 37.4 and part 40 of the Commission’s regulations, prior to listing a new 

swap for trading, SEFs and DCMs must either submit the product to the Commission for prior 

approval or self-certify to the Commission that the new product complies with the Commodity 

Exchange Act (“CEA”) and the Commission’s regulations.2 Commission regulation 40.2(a)(2) 

requires a SEF or DCM that proposes to list a new swaps product pursuant to the selfcertification procedures to provide notice and a copy of the terms and conditions of the swap one 

business day in advance of making the product available for trading.

3

 Accordingly, under the 

product self-certification procedures, Commission staff is ensured of having one full business 

day to conduct a preliminary evaluation of each swaps product and accompanying submission.

 

1

This letter responds to and fully grants the no-action relief requested by: (1) the Wholesale Markets Brokers’ 

Association on behalf of various SEFs in a letter dated September 29, 2013; and (2) ELX Futures, L.P., a DCM, in a 

letter dated September 29, 2013.

2

17 CFR 37.4, 40.2 and 40.3.

3

17 CFR 40.2(a)(2). For these purposes, a “business day” means “the intraday period of time starting at the 

business hour of 8:15 a.m. and ending at the business hour of 4:45 p.m. . . . Eastern Standard Time or Eastern 

Daylight Savings Time, whichever is currently in effect in Washington, DC, on all days except Saturdays, Sundays, 

and Federal holidays in Washington, DC.” 17 CFR 40.1(a).
Page 2

II. Application of the One Business Day Review Procedure to SEFs and DCMs

The Division has been informed by certain SEFs and DCMs that they face several 

obstacles to achieving compliance with the product self-certification requirements of Regulation 

40.2 with respect to new swaps products.

First, most of the entities who will be operating SEFs on October 2, 2013 have already 

been operating trading platforms for the trading of swaps pursuant to various exemptions and 

exclusions in the CEA prior to the repeal of those provisions by the Dodd-Frank Wall Street 

Reform and Consumer Protection Act (e.g., CEA Sections 2(d)(2), 2(h)(3) and 5d as those 

provision were in effect prior to July 16, 2011). Subsequently, these same entities have

continued to operate those unregulated platforms pursuant to applicable Commission exemptive 

orders and staff no-action letters, the most recent of which will expire on October 2, 2013.

4

 The 

October 2nd expiration date coincides with the compliance date for the Commission’s Part 37 

regulations governing SEFs.5 The transitioning of the operations of these entities from an unregulated to a regulated environment will likely result in an unprecedented number of selfcertified product filings by SEFs on September 30th, which is the last date on which a product 

can be self-certified to the Commission and be listed by October 2

nd. SEFs represent that they 

face logistical challenges in meeting this deadline.

Second, the possible federal government shutdown on October 1, 2013 may also

complicate the ability of both SEFs and DCMs to trade swaps products in a regulated 

environment. For instance, in the event of a government shutdown on October 1st, any swaps 

product self-certified to the Commission pursuant to Regulation 40.2(a)(2) on September 30th or 

later, could not be implemented until the business day following the first business day that 

government operations resumed as all review periods related to Part 40 filings would be tolled 

for the duration of any government shutdown.

The Division believes that the one business day review period for self-certified product 

submissions required by Commission Regulation 40.2(a)(2) could impede the ability of both 

SEFs and DCMs to begin trading swaps products in a regulated environment due to both the 

short time before the compliance date for the SEF final rules and the possible federal government 

shutdown.

III. Scope of No-Action Relief

 

4

See Effective Date for Swap Regulation, Final Order, 76 FR 42508 (July 19, 2011); Amendment to July 14, 2011 

Order for Swap Regulation, Final Order, 76 FR 80233 (December 23, 2011); Second Amendment to July 14, 2011 

Order for Swap Regulation, Final Order, 77 FR 41260 (July 13, 2012); CFTC No-Action Letter No. 12-48 

(December 11, 2012), available at http://www.cftc.gov/ucm/groups/public/@lrlettergeneral/documents/letter/12-

48.pdf; CFTC No-Action Letter No. 13-28 (June 17, 2013), available at

http://www.cftc.gov/ucm/groups/public/@lrlettergeneral/documents/letter/13-28.pdf.

5

17 CFR part 37.
Page 3

In light of the above-described unique circumstance of applying Commission regulation 

40.2(a)(2) to new swap product filings of SEFs and DCMs, DMO believes that no-action relief is 

necessary to prevent market interruption and to ensure continuity in the operations of SEFs and 

DCMs. Accordingly, DMO will not recommend that the Commission initiate an enforcement 

action against any currently registered SEF or DCM for violation of Commission Regulation 

40.2(a)(2) if, during a time limited period, it lists any swap product for trading on the same day 

that it submits a self-certification of the product pursuant to Commission Regulation 40.2. This

time limited no-action relief would commence on September 30, 2013 and expire on October 3, 

2013 or, if there is a federal government shutdown on that date, the first business day after the 

conclusion of such shutdown.

This letter, and the no-action position taken herein, represents the views of DMO only, 

and does not necessarily represent the positions or views of the Commission or of any other 

division or office of the Commission. The no-action positions taken herein do not excuse any 

SEF or DCM from compliance with any other applicable requirements of the CEA or the 

Commission’s regulations thereunder, including all of the other provisions of Regulation 40.2 

regarding self-certified swap submission. In this connection, DMO particularly notes the 

requirements of: (1) Commission Regulation 40.2(a)(3)(vi) that SEFs and DCMs publish swap 

product submissions, including the terms and conditions of such products, on their websites; and 

(2) Commission Regulation 40.2(d) regarding the class certification of swap products based upon 

excluded commodities, as that term is defined in CEA Section 1a(19). As with all no-action 

letters, DMO retains the authority to condition further, modify, suspend, terminate or otherwise 

restrict the terms of the no-action relief provided herein, in its discretion. 

If you have any questions concerning this correspondence, please contact David P. Van 

Wagner, Chief Counsel, at (202) 418-5481, or Thomas Leahy, Associate Director, at (202) 418-

5278.

Sincerely,

_________________________

David P. Van Wagner

Chief Counsel

Division of Market Oversight

_________________________

Nancy Markowitz

Deputy Director

Division of Market Oversight