CFTC Issues Extensions in Two No-Action Letters Regarding DCO and DCM (CFTC Letters 14-85 and 14-86)

The CFTC issued two separate no-action letters extending relief from CFTC Letters 13-52 and 13-53 to derivatives clearing organization ("DCO") LCH.Clearnet Limited ("LCH"), and designated contracts market ("DCM") Nodal Exchange LLC ("Nodal").

In letter 14-85, the CFTC extended the no-action relief provided in Letter 13-52 from CEA Section 5b ("Derivatives Clearing Organizations"). The letter specifies that it will continue not to recommend enforcement against LCH for clearing certain swaps executed on DCMs or swap execution facilities.

In letter 14-86, the CFTC extended the no-action relief provided in Letter 13-53 to LCH and Nodal from CEA Section 5 ("Designation of Boards of Trade as Contract Markets") and Section 5b. The letter specifies that it will not take enforcement action against LCH and its clearing members if LCH clears futures contracts and options on futures contracts listed for trading on Nodal before LCH is authorized to provide such clearing services under an amended DCO registration order. Additionally, the CFTC will not take enforcement action if Nodal contracts are cleared by LCH before it is authorized to clear such transactions.

Relief provided in both of the letters will expire on December 31, 2014, or the date upon which the CFTC approves or denies LCH's application for an amended DCO registration order.

See: CFTC Letter 14-85; CFTC Letter 14-86.Related news: CFTC Issues Two Extensions of No-Action Relief to LCH and Nodal (CFTC Letters 14-38 and 14-39) (March 27, 2014); CFTC No-Action Letter 13-52: LCH.Clearnet Ltd and Clearing Members (September 23, 2013); Nodal Exchange Converts from Exempt Commercial Market to Fully Regulated Designated Contract Market (September 30, 2013).