CFTC Issues Two Extensions of No-Action Relief to LCH and Nodal (CFTC Letters 14-38 and 14-39)

The CFTC Division of Clearing and Risk ("DCR") and the Division of Market Oversight ("DMO") issued two no-action letters extending relief for LCH.Clearnet Limited ("LCH"), a registered derivatives clearing organization ("DCO"), and Nodal Exchange LLC ("Nodal"), a designated contract market ("DCM").

CFTC Letter 14-38 provides an extension of no-action relief issued to LCH in CFTC Letter 13-52, which states that DCR would not recommend enforcement action against (i) LCH for clearing certain swaps executed on, or subject to the rules of, DCMs or swap execution facilities ("SEFs"), or (ii) clearing members of LCH for clearing DCM/SEF swaps through LCH. Letter 14-38 extends this no-action relief until the earlier of June 30, 2014, or the date upon which the CFTC approves or denies LCH's application for an amended DCO registration permitting it to clear DCM/SEF swaps.

CFTC Letter 14-39 provides an extension of no-action relief issued to LCH and Nodal in CFTC Letter 13-53, which states that DCR and DMO would not recommend enforcement action against (i) LCH and its clearing members, if LCH clears futures contracts and options on futures contracts listed for trading on Nodal ("Nodal Contracts") before LCH is authorized to provide such clearing services under an amended DCO registration order pursuant to CEA Section 5b(a), or (ii) Nodal, if Nodal Contracts are cleared by LCH before it is authorized to clear such transactions, as required by CEA Section 5(d)(11)(A) and CFTC Rule 38.601. Letter 14-39 extends this relief until the earlier of June 30, 2014, or the date upon which the CFTC approves or denies LCH's application for an amended DCO registration order permitting it to clear all futures and options futures, including Nodal Contracts.

See: CFTC Letter 14-38; CFTC Letter 14-39. Related news: CFTC Requests Public Comment on LCH.Clearnet's Petition for Amendment to Orders of Registration as a DCO (February 11, 2014); CFTC No-Action Letter 13-52: LCH.Clearnet Ltd and Clearing Members (September 23, 2013).