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CFTC Staff Extends No-Action Relief From The Execution Requirement For Swaps In Certain Types Of Package Transactions

Date 09/10/2020

The Division of Market Oversight (DMO) of the Commodity Futures Trading Commission today extended no-action relief for swaps executed as part of a package transaction in the categories described below. This extension will enable DMO to continue to assess the appropriate response for applying the trade execution requirement to swaps in certain types of package transactions. This no-action relief will expire on the earlier of: (i) 11:59 pm (EDT) November 15, 2022, or (ii) the applicable effective date or compliance date of a CFTC action, including without limitation a rulemaking or order, that provides a permanent solution.

The summary of the relief provided, as explained below, is for reference only.

Package Transaction Category

Relief Expiration

MAT/New Issuance Bond: At least one individual swap component is subject to the trade execution requirement and at least one individual component is a bond issued and sold in the primary market

Relief from CEA section 2(h)(8) for MAT/New Issuance Bond Package Transactions.  Under this relief, the swap components subject to the trade execution requirement are not required to be executed on a SEF or DCM. 

Relief from Commission regulation 37.9 and CEA section 5(d)(9) for MAT/New Issuance Bond Package Transactions, which permits a SEF or DCM to offer any method of execution for the swap components.

Relief from Commission regulation 37.3(a)(2) for Package MAT/New Issuance Bond Transactions, which permits a SEF to not offer an Order Book as a minimum trading functionality for the swap components.

MAT/Futures: At least one individual swap component is subject to the trade execution requirement and all other components are contracts for the purchase or sale of a commodity for future delivery, i.e., futures contracts.  This category may include:

 

  • MAT swap v. Treasury futures
  • MAT swap v. Eurodollar futures

Relief from CEA section 2(h)(8) for MAT/Futures Package Transactions.  Under this relief, the swap components subject to the trade execution requirement are not required to be executed on a SEF or DCM. 

Relief from Commission regulation 37.9 and CEA section 5(d)(9) for MAT/Futures Package Transactions, which permits a SEF or DCM to offer any method of execution for the swap components.

Relief from Commission regulation 37.3(a)(2) for MAT/Futures Package Transactions, which permits a SEF to not offer an Order Book as a minimum trading functionality for the swap components.

MAT/Non-MAT (Uncleared): At least one of the swap components is subject to the trade execution requirement and at least one of the components is a CFTC swap that is not subject to the clearing requirement.  This category may include:

 

  • MAT swap v. swaption
  • MAT swap v. uncleared credit default swap

Relief from Commission regulation 37.9 and CEA section 5(d)(9) for MAT/Non-MAT (Uncleared) Package Transactions, which permits a SEF or DCM to offer any method of execution for the swap components.

Relief from Commission regulation 37.3(a)(2) for MAT/Non-MAT (Uncleared) Package Transactions, which permits a SEF to not offer an Order Book as a minimum trading functionality for the swap components.

MAT/Non-Swap Instruments: At least one of the swap components is subject to the trade execution requirement and at least one of the components is not a swap. This category excludes U.S. Dollar Swap Spreads, MAT/Futures, MAT/Agency MBS, and MAT/New Issuance Bond.  This category may include:

  • MAT swap v. single-name credit default swap
  • MAT swap v. bond (secondary market transaction)

Relief from Commission regulation 37.9 and CEA section 5(d)(9) for MAT/Non-Swap Instruments Package Transactions, which permits a SEF or DCM to offer any method of execution for the swap components.

Relief from Commission regulation 37.3(a)(2) for MAT/Non-Swap Instruments Package Transactions, which permits a SEF to not offer an Order Book as a minimum trading functionality for the swap components.

MAT/Non-CFTC Swap: At least one of the swap components is subject to the trade execution requirement and at least one of the components is a swap over which the CFTC does not have exclusive jurisdiction (e.g., a mixed swap)

 

 

 

 

 

RELATED LINKS

 

Relief from Commission regulation 37.9 and CEA section 5(d)(9) for MAT/Non-CFTC Package Transactions, which permits a SEF or DCM to offer any method of execution for the swap components.

Relief from Commission regulation 37.3(a)(2) for MAT/Non-CFTC Package Transactions, which permits a SEF to not offer an Order Book as a minimum trading functionality for the swap components.