CFTC Staff Provides Trade Execution Relief for LCH on Default Management Transactions

The CFTC staff granted no-action relief to LCH Limited ("LCH") from the trade execution requirement for certain transactions entered into under established default rules and procedures.

In its request for relief, LCH stated that the trade execution requirements under Section 2(h)(8) of the CEA (the "Trade Execution Requirements") may hinder the clearinghouse's ability to manage a customer default, as the requirement limits the number of available counterparties for certain products. LCH stated that the relief would allow it to better manage its exposure to potential losses resulting from a customer default.

The letter states that, under the circumstances represented by LCH, the Division of Clearing and Risk and the Division of Market Oversight will not recommend enforcement action against LCH clearing members for effecting swaps pursuant to LCH's default rules and procedures without complying with the trade execution requirement.