respond, the Commission may modify, condition, suspend, terminate or otherwise restrict the
terms of this Order, as appropriate and permitted by law, on the Commission’s own motion.

This Order does not affect any other requirements under the CEA or the Commission’s

regulations. The Commission particularly emphasizes that the following requirements continue
to apply:

(1) The reporting requirements set forth in Parts 43 and 45 of the Commission’s
regulations continue to apply to counterparties that are subject to such reporting
requirements, in connection with swap transactions executed on an ETP that is
exempt from SEF registration pursuant to this Order.

(2) This Order will not affect the application of CEA section 2(e), under which it is
unlawful for any U.S. person, other than an eligible contract participant as defined in
CEA section 1a(18), to enter into a swap unless the swap is entered into on, or subject
to the rules of, a designated contract market.

(3) The following clearing-related requirements will continue to apply to swap
transactions executed on an ETP that is exempt from SEF registration pursuant to this
Order:

i. When a swap transaction executed by a U.S. person on such an ETP is a
“customer” position subject to CEA section 4d, the transaction, if intended to
be cleared, must be cleared through a Commission-registered futures
commission merchant (“FCM”) at a Commission-registered derivatives
clearing organization (“DCO”), unless otherwise permitted by Commission
tule or order;

ii. | When a swap transaction executed by a U.S. person on such an ETP is a
“proprietary” position under Commission Regulation 1.3, the transaction, if

intended to be cleared, must be cleared either through a Commission-
registered DCO or a clearing organization that has been exempted from DCO


(3) Each ETP operator subject to this Order will obtain a user agreement from each
market participant, and such agreement shall provide that the market participant will
(i) abide by the ETP operator’s business rules; and (ii) produce to the ETP operator
information and documents related to its trading on the ETP upon the ETP operator’s
request; and

(4) Each ETP operator subject to this Order will preserve all order data, including all

order modifications and cancellations, as part of its regulatory obligations to preserve
transaction data for a period of ten years.

Accordingly, the Commission hereby exercises its discretion pursuant to CEA section
Sh(g) and ORDERS that each of the ETPs listed in Appendix A to this Order, as such Appendix
may be amended by the Commission from time to time, is exempt from the requirement to
register as a SEF pursuant to CEA section 5h;

Therefore, transactions involving swaps that are subject to CEA section 2(h)(8) may be
executed on an ETP listed in Appendix A to this Order, as such Appendix may be amended by
the Commission from time to time; and

Therefore, transactions involving swaps that are not subject to CEA section 2(h)(8) also
may be executed on an ETP listed in Appendix A to this order, as such Appendix may be
amended by the Commission from time to time.

In the event of any changes in the material facts or circumstances pursuant to which this
Order is issued, or for any reason in the Commission’s discretion, and after appropriate notice to
JFSA and the relevant ETP(s) listed in Appendix A to this Order (as such Appendix may be

amended by the Commission from time to time), and opportunity for JFSA and such ETP(s) to


registration by the Commission pursuant to CEA section Sb(h) (an “Exempt
DCO”); and

iii. | When a swap transaction is subject to the Commission’s clearing requirement
under Part 50 of the Commission’s regulations, and is entered into by a person
that, pursuant to CEA section 2(h)(1), is subject to such clearing requirement,
the transaction must be cleared either through a Commission-registered DCO
or an Exempt DCO; provided that, consistent with (i) above, if the transaction
is a “customer” position subject to CEA section 4d, it must be cleared through
a Commission-registered FCM at a Commission-registered DCO, and cannot
be cleared through an Exempt DCO, unless otherwise permitted by
Commission rule or order.

If, as a result of the clearing arrangements that such an ETP has in place, some swap
transactions executed on the ETP are cleared by a clearing organization that is not a
Commission-registered DCO, the ETP must, as a condition of exemption from SEF

registration pursuant to this Order, have a rule in its rulebook that requires the types

of swap transactions described in clauses (i), (ii), and (iii) above, if intended to be

cleared, to be cleared in a manner consistent with the requirements described in

clauses (i), (ii) and (iii), respectively.

This Order shall become effective as of July 11, 2019.

Issued in Washington DC on this 11th day of July, 2019.

By the Commission,

YA00 WZ

Robert N. Sidman
Deputy Secretary of the Commission



UNITED STATES OF AMERICA
Before the
COMMODITY FUTURES TRADING COMMISSION

In the Matter of the Exemption of Electronic Trading
Platforms Registered Within Japan from the

Requirement to Register with the Commodity

Futures Trading Commission as Swap Execution Facilities

ORDER OF EXEMPTION

Commodity Exchange Act (“CEA”) section 5h(g) authorizes the Commodity Futures
Trading Commission (“Commission”) to exempt, conditionally or unconditionally, a swap
execution facility (“SEF”) from registration under CEA section 5h if the Commission finds that
the facility is “subject to comparable, comprehensive supervision and regulation on a
consolidated basis by ... the appropriate governmental authorities in the home country of the
facility.”

Whereas, electronic trading platforms are derivatives trading venues under Japanese law;

Whereas, an “electronic trading platform” management service or “ETP” is defined in
Article 1(4) of Japan’s Cabinet Office Order on Financial Instruments Business, etc. (Cabinet
Office Order No. 52 of August 6, 2007) (“COOFIB”) as “services provided by a Financial
Instruments Business Operator, etc. for Specified Over-the-Counter Derivatives Transactions or

intermediary, brokerage (excluding Brokerage for Clearing of Securities, etc.) or agency services


Appendix A

List of ETPs that are registered and in good standing within Japan that are subject to this
Exemption Order

Trading Venue Name

BGC Shoken Kaisha Limited (Tokyo branch)
Bloomberg Tradebook Japan Ltd.

Clear Markets Japan Inc.

Totan ICAP Co., Ltd.

Tradeweb Japan Ltd.

Tullet Prebon ETP Japan Ltd.

Ueda Tradition Securities Ltd.


therefore in the course of trade, using an electronic data processing system to be used for the
business of Over-the-Counter Derivatives Transactions, etc.;”

Whereas, Japanese law requires any operator of an ETP in Japan to be registered by the
Financial Services Agency, Government of Japan (“JFSA”);

Whereas, legal acts of Japan, including in particular the Financial Instruments and
Exchange Act (No. 25 of 1948) (“FIEA”); the COOFIB; the Cabinet Office Order on the
Regulation of Over-the-Counter Derivatives Transactions (Cabinet Office Order No. 48 of July
11, 2012) (“COO-OTC Derivatives Transactions Order”); the Comprehensive Guidelines for
Supervision of Financial Instruments Business Operators (April 2018) (“Supervisory
Guidelines”); and the Public Notice of JFSA No. 67 (pubic notice regarding over-the-counter
derivatives transactions) (effective September 1, 2015) (“Public Notice No. 67”); and certain
additional guidance issued by JFSA establish requirements with respect to ETPs;

Whereas, JFSA administers the FIEA and COOFIB and supervises trading facilities
including ETPs;

Whereas, Commission staff has engaged in extensive and ongoing communications with
JFSA staff to understand more fully both Japanese requirements that apply with respect to ETPs,
as well as the mechanisms whereby implementation of such requirements will be supervised and
enforced by JFSA;

Whereas, based on the information and representations provided by JFSA staff, regarding
the Japanese requirements that apply with respect to ETPs, the Commission has determined that,

when evaluated against the regulatory and supervisory regime that applies with respect to SEFs


under the CEA and the Commission’s regulations, ETPs that are registered within Japan are
subject to comparable, comprehensive supervision and regulation on a consolidated basis;

Therefore, the Commission has determined that the regulatory frameworks for ETPs
satisfy the statutory standard set forth in CEA section 5h(g) for granting an exemption from the
SEF registration requirement.

Whereas, JFSA staff has requested an exemption from the SEF registration requirement,
pursuant to CEA section 5h(g), on behalf of the ETPs listed in Appendix A to this Order, and has
represented that each such ETP will, as of July 4, 2019, be registered and in good standing in
Japan;

Whereas, pursuant to the determination made in this Order that regulatory frameworks
for ETPs satisfy the standard, set forth in CEA section 5h(g), for granting an exemption from the
SEF registration requirement, JFSA staff may, in the future, request to amend the list in
Appendix A to include additional ETPs that are registered and in good standing in Japan; and

Whereas, JFSA has represented to the Commission that the following conditions will
apply to the ongoing maintenance of this Order:

(1) JFSA will notify the Commission, within ten business days, when an ETP is no

longer registered by JFSA;

(2) JFSA will provide the Commission with notice, and copies in the English language of

the text, of any material change to the FIEA, the COOFIB, the COO-OTC Derivatives
Transactions Order, the Supervisory Guidelines, Public Notice No. 67, or any other

Japanese regulatory requirement that is applicable to ETPs;