CFTC Adopts Swaps Margin Exemption for the European Stability Mechanism

Commentary by Nihal Patel

The CFTC adopted a final rule to exempt certain transactions with the European Stability Mechanism ("ESM") from uncleared swap margin requirements.

The final rule codifies existing no-action relief to exempt uncleared swaps with the ESM from margin requirements by explicitly excepting the ESM from the definition of "financial end user." In a parallel action, the CFTC staff extended no-action relief provided under Letter 19-22, since the final rule will not be effective until 30 days after publication in the Federal Register.

The rulemaking also corrects a typo in CFTC Rule 23.157(c)(1) ("Custodial arrangements"), fixing an incorrect cross-reference.

CFTC Chair Heath P. Tarbert and Commissioners Brian Quintenz and Dawn D. Stump issued statements in support of adoption of the final rule.

Commentary

This is about as straightforward as agency rulemaking gets. The CFTC codified prior staff guidance and corrected a typo.

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