CFTC Staff Extends Clearing Relief for the European Stability Mechanism
The CFTC Division of Clearing and Risk extended no-action relief to the European Stability Mechanism ("ESM") from the swaps clearing requirement.
The relief, which applies to CEA Section 2(h)(1) and CFTC Rules 50.2 and 50.4 (a/k/a the "Clearing Requirement"), is an extension of relief previously granted under Letters 17-58, 19-23, and 20-13. The most recent relief was scheduled to expire on September 30, 2020.
According to the CFTC, Letter No. 20-22 extends the relief provided in Letter No. 20-13 until the earlier of (i) December 31, 2020 and (ii) the effective date of a final CFTC rule relating to application of the clearing requirement to swaps entered into by the ESM.
Commentary
The extension is an implicit acknowledgment that the CFTC will not finalize proposed updates to the clearing exemptions as quickly as originally anticipated (though the new date suggests the CFTC does expect to complete the rulemaking soon). The proposal, which was put forth in April, would provide a formal exception from clearing for the ESM.