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 

Clearing and Risk

Division of 

Market Oversight

Gary Barnett

Director

Phyllis P. Dietz

Acting Director

Vincent A. McGonagle

Director

CFTC Letter No. 14-140

No-Action

November 14, 2014

Division of Swap Dealer and Intermediary Oversight

Division of Clearing and Risk

Division of Market Oversight

Re: Extension of No-Action Relief: Transaction-Level Requirements for Non-U.S. Swap 

Dealers

Ladies and Gentlemen:

This letter extends the no-action relief provided in CFTC Staff Letter No. 14-74, which 

extended the no-action relief provided in CFTC Staff Letters Nos. 13-71 and 14-01, which 

responded to requests received by the Division of Swap Dealer and Intermediary Oversight 

(“DSIO”), the Division of Clearing and Risk, and the Division of Market Oversight (collectively, 

the “Divisions”) of the Commodity Futures Trading Commission (“Commission”) from swap 

dealers (“SDs”) registered with the Commission that are established under the laws of 

jurisdictions other than the United States (“Non-U.S. SDs”),1seeking time-limited relief from 

certain transaction-level requirements (as described below) under the Commodity Exchange Act 

(“CEA”) and the Commission’s regulations promulgated thereunder. The Non-U.S. SDs sought

relief from such requirements when entering into swaps with a counterparty that is not a U.S. 

person.2

 

1 Although the relief was requested by certain Non-U.S. SDs, such relief is available to all Non-U.S. SDs.

2 As used in this letter, the term “U.S. person” has the same meaning as in the Interpretive Guidance and Policy 

Statement Regarding Compliance with Certain Swap Regulations (the “Guidance”), 78 FR 45292 at 45316-17 (July 

26, 2013). 
Non-U.S. Swap Dealer Transaction-Level Requirements

Page 2

I. Background

A. Transaction-Level Requirements

When entering into a swap, an SD is required to comply with certain “Transaction-Level 

Requirements”3 with respect to the transaction. The Transaction-Level Requirements cover a 

range of requirements under the Dodd-Frank Wall Street Reform and Consumer Protection Act4

and Commission regulations promulgated thereunder: some of the requirements more directly 

address financial protection of SDs and their counterparties; others address more directly market 

efficiency and/or price discovery. The Commission believes that the Transaction-Level 

Requirements may be applied on a transaction-by-transaction basis.5

B. The DSIO Advisory

On November 14, 2013, DSIO issued an advisory6in response to inquiries from swap 

market participants regarding the applicability of the Commission’s Transaction-Level 

Requirements with respect to swaps between a Non-U.S. SD (whether an affiliate or not of a 

U.S. person) and a non-U.S. person if the swap is arranged, negotiated, or executed by personnel 

or agents of the Non-U.S. SD located in the United States.

In the advisory, DSIO stated its belief that persons regularly arranging, negotiating, or 

executing swaps for or on behalf of an SD are performing core, front-office activities of that 

SD’s dealing business, and thus, “a non-U.S. SD (whether an affiliate or not of a U.S. person) 

regularly using personnel or agents located in the U.S. to arrange, negotiate, or execute a swap 

with a non-U.S. person generally would be required to comply with the Transaction-Level 

Requirements.” 

 

3

For purposes of this letter, the term “Transaction-Level Requirements” refers to the requirements set forth in 

Commission regulations 23.202, 23.205, 23.400 to 23.451, 23.501, 23.502, 23.503, 23.504, 23.505, 23.506, 23.610, 

23.701 to 23.704, and parts 37, 38, 43, and 50. The Divisions note that the Commission has not yet finalized 

regulations regarding margin for uncleared swaps. See Exemptive Order Regarding Compliance with Certain Swap 

Regulations (the “Exemptive Order”), 78 FR 43785 at 43794 (July 22, 2013).

4

See Dodd-Frank Wall Street Reform and Consumer Protection Act, Pub. L. No. 111-203, 124 Stat. 1376 (July 21, 

2010).

5

See Guidance, 78 FR at 45366.

6 The DSIO Advisory is available on the Commission’s website:

http://www.cftc.gov/ucm/groups/public/@lrlettergeneral/documents/letter/13-69.pdf.
Non-U.S. Swap Dealer Transaction-Level Requirements

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II. Previous Relief Requested and Granted

Subsequent to issuance of the DSIO advisory, the Divisions received multiple requests 

from Non-U.S. SDs for time-limited relief from compliance with the Transaction-Level 

Requirements when entering into swaps with non-U.S. persons that are not guaranteed affiliates7

or conduit affiliates8of a U.S. person using personnel or agents located in the United States to 

arrange, negotiate, or execute such swaps (such swaps, the “Covered Transactions”). 

The Non-U.S. SDs represented that, in order to avoid market disruption for their non-U.S. 

counterparties, such time-limited relief was necessary to allow them to organize their internal 

policies and procedures to come into compliance with the Transaction-Level Requirements when 

entering into Covered Transactions. 

On November 26, 2013, the Divisions granted time-limited no-action relief until January 

14, 2014, with CFTC Staff Letter No. 13-71. 

Subsequent to the issuance of CFTC Letter 13-71, the Commission requested public 

comment regarding compliance issues implicated by Covered Transactions and, thus, on January 

3, 2014, the Divisions extended that time-limited no-action relief to September 15, 2014, with 

CFTC Staff Letter No. 14-01 and then to December 31, 2014, with CFTC Staff Letter No. 14-74. 

III. Staff Position

As was the case in CFTC Staff Letter Nos. 13-71, 14-01, and 14-74, the Divisions note 

that, as of the date of this letter, the Divisions have not recommended that the Commission take 

an enforcement action against a Non-U.S. SD (whether or not an affiliate of a U.S. person) for 

failure to comply with any applicable Transaction-Level Requirement when entering into any 

Covered Transaction.

To allow further time for consideration of the issues, the Divisions are hereby extending 

the date of the time-limited staff no-action relief provided in CFTC Staff Letter No. 14-74.

Accordingly, prior to the earlier of September 30, 2015 or the effective date of any 

Commission action with respect to the issues discussed above, the Divisions will not recommend 

that the Commission take an enforcement action against a Non-U.S. SD (whether or not an 

affiliate of a U.S. person) for failure to comply with:

 

7

For purposes of this letter, the terms “guarantee” and “guaranteed affiliate” have the same meaning as in the 

Exemptive Order. See 78 FR at 43794.

8

For purposes of this letter, the term “conduit affiliate” has the same meaning as in the Guidance. See 78 FR at 

45358-59.
Non-U.S. Swap Dealer Transaction-Level Requirements

Page 4

(a) Any applicable Transaction-Level Requirement with respect to a Covered Transaction if 

the Covered Transaction is not with a Non-U.S. SD; and

(b) If the Covered Transaction is with a Non-U.S. SD, any Transaction-Level Requirement 

other than (i) the multilateral portfolio compression requirements under Commission 

regulation 23.503; and (ii) the swap trading relationship requirements under Commission 

regulation 23.504.

For the avoidance of doubt, Commission action with respect to the issues discussed above 

may include, without limitation, a rulemaking, an order, or a determination not to take action 

with respect to such issues, or any intervening legislative developments that render the need for 

this letter moot.

This letter, and the positions taken herein, represent the views of the Division of Swap 

Dealer and Intermediary Oversight, the Division of Clearing and Risk, and the Division of 

Market Oversight only, and do not necessarily represent the positions or views of the 

Commission or of any other office or division of the Commission. 

The relief issued by this letter does not excuse persons relying on it from compliance 

with any other applicable requirements contained in the CEA or in the Regulations issued 

thereunder, nor may any person other than Non-U.S. SDs rely on it to excuse compliance with 

any applicable requirement contained in the CEA or in the Regulations issued thereunder.

Further, this letter, and the relief contained herein, is based upon the representations made 

to the Divisions. Any different, changed or omitted material facts or circumstances might render 

this no-action relief void. This letter does not create or confer any rights for or obligations on 

any person or persons subject to compliance with the CEA that bind the Commission or any of 

its other offices or divisions. As with all no-action letters, the Divisions retain the authority to 

condition further, modify, suspend, terminate, or otherwise restrict the terms of the no-action 

relief provided herein, in its discretion.

Should you have any questions, please do not hesitate to contact Gary Barnett, Director, 

DSIO, at (202) 418-5977; or Frank Fisanich, Chief Counsel, DSIO, at (202) 418-5949.

Very truly yours,

Gary Barnett

Director

Division of Swap Dealer and Intermediary Oversight
Non-U.S. Swap Dealer Transaction-Level Requirements

Page 5

Phyllis P. Dietz

Acting Director

Division of Clearing and Risk

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