CFTC Grants Fifth Extension of Trade Execution Relief for Package Transactions
The CFTC Division of Market Oversight ("DMO") extended its time-limited no-action relief from the CEA's trade execution requirement for swaps executed as part of package transactions. The relief was granted previously under CFTC Letter 15-55, and the new letter extends the relief until November 15, 2017.
The DMO noted that, by extending such relief again, it "continue[s] to assess how to enable [swap execution facilities] and [designated contract markets] to facilitate trading of certain package transactions in a manner that balances the utility of package transactions against the policy goals of the trade execution requirement. This assessment . . . indicates that trading certain categories of package transactions on a [swap execution facility] or [designated contract market], in a manner that is fully compliant with the CEA and the Commission's regulations, still presents challenges. Therefore, the Division is extending the relief provided in NAL 15-55 to enable market participants to continue to execute certain package transactions."
The DMO provided the following summary of the relief:
|
Package Transaction Category |
Relief Expiration |
|
MAT / New Issuance Bond: At least one individual swap component is subject to the trade execution requirement and at least one individual component is a bond issued and sold in the primary market. |
Relief from CEA section 2(h)(8) until November 15, 2017. Under this relief, the swap components subject to the trade execution requirement are not required to be executed on a swap execution facility ("SEF") or designated contract market ("DCM"). Relief from CFTC Regulation § 37.9 and CEA section 5(d)(9) until November 15, 2017. The relief permits an SEF or DCM to offer any method of execution for the swap components. Relief from CFTC Regulation § 37.3(a)(2) until November 15, 2017. The relief allows SEFs not to offer Order Books as minimum trading functionalities for the swap components. |
|
MAT/Futures: At least one individual swap component is subject to the trade execution requirement and all other components are contracts for the purchase or sale of a commodity for future delivery, i.e., futures contracts. This category may include:
|
Relief from CEA section 2(h)(8) until November 15, 2017. Under this relief, the swap components that are subject to the trade execution requirement are not required to be executed on an SEF or DCM. Relief from CFTC Regulation § 37.9 and CEA section 5(d)(9) until November 15, 2017. The relief allows an SEF or DCM to offer any method of execution for the swap components. Relief from CFTC Regulation § 37.3(a)(2) until November 15, 2017. The relief allows SEFs not to offer Order Books as minimum trading functionalities for the swap components. |
|
MAT/Non-MAT (Uncleared): At least one of the swap components is subject to the trade execution requirement and at least one of the components is a CFTC swap that is not subject to the clearing requirement. This category may include:
|
Relief from CFTC Regulation § 37.9 and CEA section 5(d)(9) until November 15, 2017. The relief allows an SEF or DCM to offer any method of execution for the swap components. Relief from CFTC Regulation § 37.3(a)(2) until November 15, 2017. The relief allows SEFs not to offer Order Books as minimum trading functionalities for the swap components. |
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MAT / Non-Swap Instruments: At least one of the swap components is subject to the trade execution requirement and at least one of the components is not a swap. This category excludes U.S. Dollar Swap Spreads, MAT/Futures, MAT/Agency MBS, and MAT / New Issuance Bond. This category may include:
|
Relief from CFTC Regulation § 37.9 and CEA section 5(d)(9) until November 15, 2017. The relief allows an SEF or DCM to offer any method of execution for the swap components. Relief from CFTC Regulation § 37.3(a)(2) until November 15, 2017. The relief allows SEFs not to offer Order Books as minimum trading functionalities for the swap components. |
|
MAT / Non-CFTC Swap: At least one of the swap components is subject to the trade execution requirement and at least one of the components is a swap over which the CFTC does not have exclusive jurisdiction (e.g., a mixed swap). |
Relief from CFTC Regulation § 37.9 and CEA section 5(d)(9) until November 15, 2017. The relief allows an SEF or DCM to offer any method of execution for the swap components. Relief from CFTC Regulation § 37.3(a)(2) until November 15, 2017. The relief allows SEFs not to offer Order Books as minimum trading functionalities for the swap components. |
