U.S. COMMODITY FUTURES TRADING COMMISSION

Three Lafayette Centre

1155 21st Street, NW, Washington, DC 20581

Telephone: (202) 418-5977

Facsimile: (202) 418-5407

gbarnett@cftc.gov

Division of Swap Dealer and

Intermediary Oversight

Gary Barnett

Director

CFTC Letter No. 13-07

No-Action

March 29, 2013

Division of Swap Dealer and Intermediary Oversight

Re: Time-Limited No-Action Relief for Securitization Vehicles Regarding Compliance with 

Part 4 of the Commission’s Regulations

Ladies and Gentlemen:

This letter is provided by the Division of Swap Dealer and Intermediary Oversight (the 

“Division”) of the Commodity Futures Trading Commission (the “Commission”) to provide timelimited no-action relief for securitization vehicles that do not satisfy the conditions and 

criteria set forth in CFTC Staff Letter No. 12-14 or CFTC Staff Letter No. 12-45 with 

respect to certain provisions of Part 4 of the Commission’s regulations.

In CFTC Staff Letter 12-45, the Division stated that, with respect to securitization vehicles

that cannot satisfy the terms and conditions of either CFTC Staff Letter No. 12-14 or CFTC Staff 

Letter No. 12-45, it would not recommend enforcement action against the commodity pool operator of 

the securitization vehicle for failure to register as such with respect to such securitization vehicle until 

March 31, 2013. 

The Division is also continuing to discuss issues relating to compliance with Part 4 of the 

Commission’s regulations with the securitization industry. Because the Division has not finalized its 

policy determinations regarding what relief, if any, should be provided to the commodity pool 

operators of securitization vehicles, the Division has determined that it will not recommend 

enforcement action against the commodity pool operator of a securitization vehicle for failure to fully 

comply with Part 4 of the Commission’s regulations with respect to that securitization vehicle until 

June 30, 2013, subject to the terms and conditions below:

1. The commodity pool operator of a securitization vehicle must initiate registration as 

such through the filing of Forms 7-R and 8-R, as necessary, as well as any fees 

required, by March 31, 2013;

2. During this period, the commodity pool operator of a securitization vehicle must 

comply with all provisions of Part 4 of the Commission’s regulations, subject to, in 

the case of the operated securitization vehicle only, the terms and conditions 

provided in a-g below:
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a. The commodity pool operator of a securitization vehicle comprised of a static 

pool of assets that does not have either an equity tranche or debt issuances 

rated lower than BB will not be required to comply with Commission 

regulation 4.25 with respect to that securitization vehicle ;

b. With respect to the calculation of net asset value with respect to the 

securitization vehicle, fixed income securities rated BB and higher should be 

treated as debt and all other fixed income securities and equity tranches 

should be treated as equity;

c. With respect to Commission regulation 4.13(a)(3), the commodity pool 

operator of a securitization vehicle that did not or does not pay any initial 

margin with respect to the vehicle’s swaps positions must use the alternative 

net notional test under Commission regulation 4.13(a)(3)(ii)(B) to determine 

eligibility for exemption from registration under that section;

d. In lieu of the financial statement requirements under Commission regulation 

4.22 for the operated securitization vehicle, the commodity pool operator of 

that securitization vehicle provides basic, material information concerning 

the structure of the securities and distributions thereon, the nature, 

performance and servicing of the assets supporting the securities, and any 

swaps held in that securitization vehicle’s portfolio, including a discussion of 

that vehicle’s counterparties;

e. The commodity pool operator of a securitization vehicle need not comply 

with the specific requirements of Commission regulations 4.21(b), 4.24(a) 

and (s), and the requirement under 4.23 that books and records be maintained

at the main business office with respect to the operated securitization vehicle;

f. The commodity pool operator of a securitization vehicle with an amortizing 

pool of assets need not comply with Commission regulation 4.25(a)(1)(F) 

and (G) with respect to the operated securitization vehicle; and

g. With respect to the requirement under Commission regulation 4.24(h) that the

commodity pool operator of a securitization vehicle disclose the percentage 

of that securitization vehicle’s assets used to trade commodity interests, the 

commodity pool operator of that securitization vehicle that holds static swap 

positions must provide full and complete disclosure regarding the swaps 

positions and their functions within that securitization vehicle in addition to a 

percentage;

3. The commodity pool operator files notice with the Division using the email address 

dsionoaction@cftc.gov with the subject line of such email as “Securitization 

Compliance No-Action.”
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The no-action relief provided herein contains a collection of information, as that term is 

defined in the Paperwork Reduction Act.1 Therefore, a control number for the collection must be 

obtained from the Office of Management and Budget. In accordance with 44 U.S.C. § 3507(d) and 5 

C.F.R. §§ 1320.8 and 1320.10, the Division will, by separate action, prepare an information 

collection request for review and approval by OMB, and will publish in the Federal Register a notice 

and request for public comments on the collection burdens associated with the no-action relief. If 

approved, a securitization vehicle may not rely on the Division's determination not to recommend an 

enforcement action to the Commission unless the vehicle provides the information the Division has 

determined is essential to the provision of no-action relief.

This letter, and the positions taken herein, represent the view of this Division only, and do

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

of the Commission. 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 Commission’s

regulations issued thereunder. This letter does not create or confer any rights for or obligations 

on any person or persons subject to compliance with the Commodity Exchange Act that bind 

the Commission or any of its other offices or divisions. Further, this letter, and the relief

contained herein, is based upon the representations made to the Division. Any different, changed 

or omitted material facts or circumstances might render this letter void.

Should you have any questions, please do not hesitate to contact Amanda Olear, Special

Counsel, at 202-418-5283.

Very truly yours,

Gary Barnett

Director

Division of Swap Dealer and

Intermediary Oversight

cc: Regina Thoele, Compliance

National Futures Association, Chicago

 

1

44 U.S.C. § § 3501 et. seq.