CFTC Issues Further No-Action Relief for Certain U.S. Banks, Wholly Owned by Non-U.S. Swap Dealers, for Purposes of Making Calculations under the Swap Dealer Definition

The CFTC Division of Swap Dealer and Intermediary Oversight (DSIO) issued a no-action letter that provides further relief for certain U.S. banks that are wholly owned by non-U.S. swap dealers. The no-action letter extends the relief provided in CFTC Staff Letter No. 12-61 to foreign-owned U.S. banks with differing ownership structures, including state-chartered banks regulated by the Federal Reserve or the Federal Deposit Insurance Corporation; the prior no-action relief was limited to national banks owned by foreign-based financial holding companies, while the new no-action letter expands the relief to any U.S. bank owned by a foreign bank holding company. The new no-action letter also specifically requires that the U.S. bank maintain separate swap-related “sales, marketing, and trading personnel” from those of its affiliates. The new no-action letter states that the Division will not recommend that the Commission take enforcement action against any U.S. bank that is wholly owned by a foreign entity for failure to consider the swap dealing activities of its foreign affiliates, or the U.S. branches of such affiliates, with respect to swap positions executed from and after October 12, 2012, when determining whether such U.S. bank satisfies the de minimis exception to the swap dealer definition and registration requirements, so long as the U.S. bank meets certain conditions specified in the letter. Further, to rely on the relief provided in the no-action letter, a person must file a claim with DSIO.

View CFTC Letter 12-71.