CFTC Staff No-Action Relief: Preservation of the Regulatory Status Quo With Respect to Swaps Cleared by a DCO (and Related) Collateral

The CFTC issued temporary no-action relief until November 8, 2012 with respect to the new statutory requirement imposed by the Dodd-Frank Act for the segregation of cleared swaps collateral held at a DCO. Dodd-Frank amended the CEA to require the segregation of customer collateral used to margin cleared swaps. In addition, an FCM and a DCO that receives Customer Swaps Collateral with respect to cleared swap positions must treat such Customer Swaps Collateral as belonging to the relevant customer and cannot use that Customer Swaps Collateral to margin or secure its own swap positions or any other customer's cleared swap positions. In February of 2012, the CFTC adopted rules implementing these statutory requirements and imposing a new model for segregation for cleared swaps (the legally segregated operationally commingled model or "LSOC"). The compliance date for the LSOC rules was set for November 8, 2012. This no-action letter clarifies that the statutory requirements as to segregation of such collateral does not apply until November 8, 2012.

See: CFTC Letter 12-10 (links externally to CFTC website).