CFTC Extends Relief from Capital and Reporting Requirements to UK- and EU-Swap Dealers

The CFTC extended no-action relief for swap dealers ("SDs") domiciled in the United Kingdom and the European Union from capital and financial reporting requirements.

The relief applies to nonbank SDs subject to the UK's Financial Conduct Authority prudential regime and France-domiciled SDs regulated under the "Investment Firms Regulation and Investment Firms Directive."

The key exemptions provided in this no-action relief include:

• Substituted Compliance for Capital and Financial Reporting. An eligible nonbank SD can comply with its home country capital and financial reporting requirements in lieu of the CFTC requirements while the CFTC continues to review its heir comparability application.
• Financial Reporting to CFTC. An eligible SD must submit financial information to the CFTC within 15 days of providing it to its home regulators. This includes statements of financial condition, income and regulatory capital. The reports must be in English and may follow the home country's format.
• Capital Shortfall Notice. An SD must notify the CFTC within 24 hours if their regulatory capital falls below 120 percent of its minimum home country capital requirements.

The relief will expire on December 31, 2026, or when a final CFTC comparability determination is issued. SDs intending to rely on this relief must submit notice to the CFTC and maintain ongoing compliance with their home country regulations.

This no-action letter extends the relief originally granted in CFTC Letter 21-20 (see previous coverage) and previously extended by CFTC Letter 22-10 (see previous coverage). The letter does not cover SDs domiciled in Japan, Mexico, France, Germany, or the UK regulated by the Prudential Regulation Authority, as these jurisdictions have already received comparability determinations in prior orders.