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CFTC issues ‘no-action letter’ for swaps trading on EU multilateral trading facilities

The Commodity Futures Trading Commission’s (CFTC) Divisions of Market Oversight (DMO) and Swap Dealer and Intermediary Oversight (DSIO) have issued a no-action letter with respect to swaps trading on multilateral trading facilities overseen by authorities designated by European Union member states.

Subsequent to the issuance of No-Action Letter 14-16, CFTC staff continued to engage in dialogue with the staffs of the European Commission and the Financial Conduct Authority of the UK, as well as with facility operators and market participants, concerning certain terms and conditions in No-Action Letter 14-16.
 
As a result of these conversations, and seeking to build upon the significant progress achieved to date towards harmonising a regulatory framework for CFTC-regulated swap execution facilities (SEFs) and EU-regulated multilateral trading facilities (MTFs), CFTC staff today issued No-Action Letter 14-46, which generally tracks the conditional relief provided in No-Action Letter 14-16. However, No-Action Letter 14-46 features several notable clarifications, as well as new and amended conditions including, but not limited to, the following items:
 
◦ An MTF must report all swap transactions to a Commission-registered or provisionally-registered swap data repository as if it were a SEF, in compliance with parts 43 and 45 of the Commission’s Regulations, as a condition subsequent to qualifying for relief;
 
◦ An MTF must certify that it is subject to and compliant with regulations that require all MTF participants to consent to the MTF’s jurisdiction, thereby enabling the MTF to effectively enforce its rules;
 
◦ Qualifying MTFs must submit monthly reports to CFTC staff summarising levels of participation and volume by US persons; and
 
◦ Clarifications regarding the reporting obligations for counterparties to swap transactions executed on or pursuant to the rules of a qualifying MTF.
 
CFTC staff believes that the revisions included in No-Action Letter 14-46 are consistent with the commitments made by the CFTC in the CFTC-EC Path Forward statement and the spirit of international cooperation evidenced by that document.

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