CFTC Issues an Advisory Pertaining to the Effective Date of the Clearing Exemption for Swaps Between Certain Affiliated Entities (Letter No. 13-23) (with Lofchie Comment)

The CFTC Division of Clearing and Risk issued an Advisory notifying market participants that the effective date of the final rule adopting the “Clearing Exemption for Swaps Between Certain Affiliated Entities” has been automatically extended by operation of law until June 18, 2013 (as opposed to June 10, which had been the date set forth in the release). The Advisory likewise states that the clearing requirement under Section 2(h)(1)(A) of the Commodity Exchange Act and CFTC Rule Part 50 does not apply until that date.

Lofchie Comment: The upshot of the Advisory is presumably that the conditions to the clearing exemption set out in the rule do not apply to swaps between affiliate counterparties. Unfortunately, the Advisory is drafted in an obscure manner that seems more intended to conceal whatever technical error the CFTC made in getting the date wrong, than it does to clarify the extent of the delay. It is not clear what conditions set out in the rule do not apply; e.g., is it necessary that the exempted parties meet the affiliation test defined in the rule?

See: Letter No. 13-23.