CFTC Issues Limited No-Action Relief from Registration for Non-U.S. IBs, CPOs and CTAs
Commentary by Steven Lofchie
The CFTC Division of Swap Dealer and Intermediary Oversight issued no-action relief from registration for persons located outside the United States who act as introducing brokers ("IBs"), commodity trading advisors ("CTAs") or commodity pool operators ("CPOs") in connection with swaps that are not subject to a CFTC clearing requirement on behalf of persons located outside of the United States.
The relief allows certain non-U.S. intermediaries to take advantage of the exemption from registration in CFTC Rule 3.10(c)(3)(i) without meeting the condition that those intermediaries submit commodity interest transactions for clearing through CFTC-registered futures commission merchants in connection with swaps that are not required to be cleared and are entered into on behalf of persons located outside the United States. A CFTC press release on the subject mentions that a more permanent fix might appear in a future amendment to CFTC Rule 3.10(c)(3)(i).
Commentary
In essence, this no-action relief fixes unintentional overreach in the original CFTC registration requirement, which seemed to mandate the CFTC registration of a non-U.S. intermediary doing business with a non-U.S. person – a result that makes no sense. While CFTC Commissioners continue to effect small fixes to problems that arose from rushed rulemaking, it would be nice to see them take on some bigger fixes as well (e.g., a procedure for requiring exchange trading). It would also be nice to hear an announcement that the CFTC will not create major new burdens (e.g., energy position limits – an idea whose time never really came, and which seems particularly absurd in light of current events).