CFTC's Division of Clearing and Risk Issues Time-Limited No-Action Relief from Required Clearing for Swaps Entered into by Certain Cooperatives (Letter 13-24)

The CFTC Division of Clearing and Risk ("DCR") issued a time-limited, no-action letter granting relief from required clearing under CEA Section 2(h)(1)(A) ("Standard for Clearing") and CFTC Rules Part 50 ("Clearing Requirement") for certain swaps entered into by qualifying cooperatives.

The no-action letter provides that DCR will not recommend enforcement action for a cooperative's failure to clear a swap if the cooperative and the swap meet certain conditions set forth in the no-action letter. To qualify for relief, one of the counterparties to the swap must be a cooperative whose members are either non-financial entities or other cooperatives whose members are non-financial entities. In addition, relief only applies to swaps entered into in connection with originating loans to cooperative members, or swaps that hedge or mitigate commercial risks related to loans to, or swaps with, cooperative members.

A proposed cooperative exemption rule is not yet final. This no-action relief will remain in effect until the earlier of June 21, 2013, or the effective date finalizing the proposed cooperative exemption.

See: CFTC Letter 13-24.