CFTC Staff Extends Package Transaction SEF No-Action Relief
The CFTC Division of Market Oversight ("DMO") extended no-action relief for package transactions. The relief, which relates to the trade execution requirement under CEA Section 2(h)(8) was previously extended by CFTC Letter 20-31 and was set to expire on November 15, 2022.
Although the CFTC codified large aspects of the no-action relief through rulemaking (see previous coverage), market participants raised concerns regarding the feasibility of fully complying with the trade execution requirement with respect to swaps that are part of a package with futures contracts. The new letter extends the relief until the earlier of (i) November 15, 2025 or (ii) the effective or compliance date of a CFTC action, including a rulemaking or order, that would provide a permanent solution for the transactions covered by the relief.
CFTC Commissioner Summer K. Mersinger stated that the CFTC's continued use of temporary no-action relief merely "kick[s] the can down the road" and is an excuse to "avoid tackling difficult issues that arise in applying [CFTC] rules[.]" She urged the CFTC to address the issues through rulemaking.
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