CFTC Issues Time-Limited No-Action Relief Regarding the Treatment of Swap Transactions on Natural Gas Exchange for Purposes of Making Calculations under the Swap Dealer Definition

On December 18, 2012, the CFTC's Division of Swap Dealer and Intermediary Oversight ("DSIO") issued time-limited no-action relief concerning the inclusion of certain swaps in a market participant's swap dealer de minimis calculation. Specifically, No-Action Letter 12-57 provides that a market participant may exclude from its calculation of the gross notional amount of swaps connected with its dealing activity any swap executed on NGX prior to the earlier of (1) March 31, 2013, or (2) the grant or denial of NGX's application as a Foreign Board of Trade ("FBOT").

The no-action relief is needed because, although NGX has clarified that its cleared natural gas, physical crude and power products should be treated as futures, confusion as to the products' regulatory status as futures existed among some market participants due to NGX's pending FBOT registration application. If NGX's FBOT registration is approved by the CFTC, then these cleared products will be treated as futures products excluded from the swap dealing de minimis calculation. In the interim period while the CFTC reviews the FBOT application, the CFTC has issued this no-action relief to provide certainty to market participants that they do not need to include these products in their swap dealing de minimis calculation.

See: CFTC Letter 12-57: Commission Regulation 1.3(ggg); No-Action.