CFTC Grants No-Action Relief to Cross Border Swap Dealer on Condition that it Comply with Counterparties’ Local Requirements CFTC Grants No-Action Relief for Swaps by London Branch of U.S. Bank with Certain Non-U.S. Counterparties
The CFTC staff provided conditional no-action relief to a provisionally registered swap dealer bank with respect to activities outside of its London branch.
The no-action letter provides relief from the CFTC's "transaction-level" requirements applicable to swaps, for transactions entered into by the bank out of its London branch with non-U.S. persons who are not "conduit affiliates" or guaranteed by U.S. persons. The relief only applies to swaps with counterparties located in a foreign jurisdiction for which the CFTC has not issued a substituted compliance determination.
Among other conditions, the relief is subject to a requirement that the aggregate notional value of the swaps entered into by the bank with counterparties located in the relevant jurisdictions does not exceed five percent of the aggregate notional value of all of the bank's swaps.
Commentary
The relief essentially expands what is sometimes referred to as the "emerging markets" exemption in the CFTC Cross-Border Guidance. The exemption in the guidance only applied to branches located in the relevant emerging market. Under this letter, the requirement as to the location of the branch is somewhat relaxed.
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The CFTC Divisions of Clearing and Risk ("DCR") and Market Oversight ("DMO") granted extensions of previously issued no-action relief for certain inter-affiliate transactions.
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