CFTC Chair Heath P. Tarbert directed staff ("Staff") on the use of (i) no-action letters, (ii) interpretive letters, (iii) Staff guidance, advisories and FAQs, and (iv) exemptive letters. He instructed Staff "to ensure that Staff Letters are limited to those circumstances that are not suitable for a general rulemaking," and that "Staff Letters should supplement, rather than replace, rulemakings" (emphases in the original).
In a "Directive on the Use of Staff Letters and Guidance," Mr. Tarbert drew the following distinctions:
With regard to no-action letters, Mr. Tarbert stated, time-limited relief should be offered to market participants (i) experiencing operational difficulties that impede timely compliance (transitional compliance relief), (ii) raising unique issues about CFTC regulations where the relevant situation was not contemplated by the relevant regulations (or "Square Peg" relief) and (iii) facing challenges brought on by, among other things, a market crisis. According to Mr. Tarbert, persons other than the recipient of a no-action letter may not rely on the letter, but may look to the letter as instructive of a Division's views.
Mr. Tarbert described interpretive letters as being derived from statutory provisions or regulations so as to provide context for ambiguous terms. For Staff guidance, advisories and FAQs, Mr. Tarbert stated, the Staff should advise the public "prospectively" as to how the Staff will implement the underlying provisions of regulation.
Mr. Tarbert stated that exemptive letters may be issued only where the Staff has been granted explicit authority by the Commission. He said that exemptive letters may include conditions that are "traceable" to relevant regulations, but cautioned against amending existing regulations within a letter and against exemptive letters that would have effect beyond the recipient, in which case, he said, rulemaking would be more appropriate.
Mr. Tarbert underscored that the CFTC acts best with public input and that, as a result, "rulemaking should be the agency's default policymaking vehicle."
The SEC Division of Trading and Markets issued a warning letter to broker-dealers operating programs in which they borrow fully paid margin securities from their customers.