The CFTC Divisions of Market Oversight ("DMO") and of Clearing and Risk ("DCR") issued no-action letters extending and modifying previously granted relief from the swap clearing and trade execution requirements for certain affiliated counterparties. The letters are related to CFTC Rule 50.52 (Inter-affiliate exemption for swaps from clearing requirements).
The DCR letter exempts entities from certain mandatory clearing and trade execution requirements. The letter also extends previous relief permitting certain affiliated counterparties to rely on alternative compliance frameworks where such counterparties operate in non-U.S. jurisdictions that have not yet implemented mandatory clearing regimes. That relief allows the counterparties to either (i) pay and collect full variation margin on all swaps with unaffiliated counterparties, or (ii) pay and collect full variation margin on all swaps with all other eligible affiliate counterparties.
The DCR expanded the scope of CFTC Letter 16-84 to allow for entities to rely on the alternative compliance frameworks in connection with swaps executed opposite eligible affiliate counterparties in Canada, Hong Kong, or Switzerland. The relief was extended to the earlier of (i) December 31, 2020 or (ii) the effective date of amendments to Rule 50.52.
The DMO letter extends previous relief from the trade execution requirement for affiliate counterparties that satisfy Rule 50.52(a) but do not satisfy Rule 50.52(b), (c), or (d). The relief is extended to the earlier of (i) December 31, 2020 or (ii) the effective date of CFTC action providing a permanent solution for the execution of inter-affiliate swaps.
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