CFTC Issues No-Action Relief to Southwest Airlines Regarding Reporting Obligations (CFTC Letter 14-134)

The CFTC Division of Market Oversight issued time-limited no-action relief to Southwest Airlines and its counterparties to allow additional time for them to comply with the reporting obligation in CFTC Rule 43.3(a) for transactions in long-dated Brent and WTI crude oil swaps and swaptions contracts.

The CFTC granted the relief, provided that (i) the contracts are not subject to the mandatory clearing requirements, (ii) the expiration dates of the contracts are at least two years out, and (iii) the contracts are reported to a swap data repository no later than 15 calendar days after being executed by Southwest or its counterparties. In granting the relief, CFTC staff acknowledged that real-time reporting of the trades in somewhat illiquid contracts would be detrimental to the contract parties.

The relief will expire upon the CFTC's determination that Brent and WTI crude oil swap and swaption contracts are subject to the mandatory clearing requirement, and/or upon the CFTC's determination that there is sufficient liquidity in such contract, thus, a shorter timeframe for the real-time reporting is warranted.

See: CFTC No-Action Letter 14-134.