The CFTC recently issued the following no-action letters:

On June 26, 2013, the CFTC issued No-action Letter 13-32 providing certain SDs with limited relief from the requirement that CCOs of SDs prepare and submit an annual report under CFTC Regulation 3.3. The relief provided in Letter 13-32 is applicable to all SDs ("Covered Firms") that:

Letter 13-32 enumerates the subjects that must be addressed in the CCO annual report of a Covered Firm for the fiscal year that ended on March 31, 2013. Subject to certain conditions, Letter 13-32 also provides relief from the CCO annual-report certification requirements.

On June 27, 2013, the CFTC issued corrected No-action Letter 13-33 (Letter 13-33) relating to certain duties imposed under final EBCS applicable to SDs and MSPs (see Practice Note, Swap Dealers and MSPs: Final Dodd-Frank External Business Conduct (EBC) Rules), as well as certain documentation requirements imposed on SDs and MSPs under final rules for SDs and MSPs (CFTC Regulation § 23.504) (see Practice Note, Swap Dealers and MSPs: Final Dodd-Frank Internal Business Conduct (IBC) Rules on Documentation, Confirmation, Reconciliation and Compression), for so-called "intended-to-be-cleared swaps" (ITBC swaps). An ITBC swap is one which is intended to be submitted for clearing contemporaneously with its execution.

Subject to certain conditions, in the context of an ITBC swap where the SD or MSP does not know the identity of the counterparty to the ITBC swap prior to execution (an anonymous ITBC swap), the letter provides relief for SDs and MSPs with respect to those EBCS requirements specified in Appendix A to the letter and the swap trading relationship documentation requirement under Commission regulation § 23.504. The EBCS requirements specified in Appendix A to Letter 13-33 are:

In addition, subject to certain conditions, SDs and MSPs need not comply with these EBCS requirements or the swap trading relationship documentation requirement under CFTC Regulation § 23.504 for ITBC swaps where the SD or MSP knows the identity of its counterparty. To avail itself of the relief provided in Letter 13-33, an SD or MSP must first enter into a "fallback agreement," as defined in the letter, with the applicable counterparty (or its duly authorized representative) which meets the conditions of the letter.

No-action letter 13-33 makes a technical correction to, and replaces an earlier version of, this letter published on June 26, 2013.

On June 26, 2013, the CFTC issued No-action Letter 13-34 (Letter 13-34) extending relief from the requirement to report valuation data for cleared swaps under the final swap data reporting (SDR) rules codified in Section 45.4(b)(2)(ii) of the CFTC's Regulations. The original relief was granted on December 17, 2012 (see Legal Update, Limited No-action Relief from Swap Data Reporting Rules Issued by CFTC). Absent Letter 13-34, this relief would have expired on June 30, 2013. During the no-action period, the CFTC will not take enforcement action against an SD or MSP for failure to comply with requirements of regulation 45.4(b)(2)(ii) to report valuation data for:

This relief extends the no action relief period to June 30, 2014.

On June 27, 2013, the CFTC issued No-action Letter 13-35 granting relief from certain data reporting obligations under Part 43 (real-time data reporting) and Part 45 (SDR data reporting) of the CFTC’s regulations for bespoke or complex swaps. The relief effectively extends a number of elements of relief previously granted in CFTC Letter 12-39, issued on November 30, 2012 (see Legal Update, No-action Relief for Bespoke Swap Data Reporting Issued by CFTC). Letter 13-35 provides extended relief to reporting parties to bespoke or complex swaps for failure to report:

The relief granted under Letter 13-35 expires on September 30, 2013.

On June 27, 2013, the CFTC issued No-action Letter 13-36 extending temporary relief to market participants from reporting obligations under Part 45 of the CFTC's regulations (final SDR rules, see Practice Note, US Derivatives Regulation: CFTC Swap Data Reporting and Recordkeeping Rules: Final "SDR" Data Reporting Rules) relating to so-called "CDS clearing-related swaps." This no-action letter extends to December 31, 2013 relief that would have expired on June 30, 2013 .

CDS clearing-related swaps are certain specialized "test" swaps that are entered into by clearing members of derivatives clearing organizations (DCOs), which are registered derivatives clearinghouses, in accordance with a DCO's price submission process rules to determine end-of-day settlement prices for cleared credit default swaps (CDS). Absent No-action Letter 13-36, temporary relief for data reporting under Part 45, previously granted by the CFTC on December 19, 2012 would have expired on June 30, 2013 (see Legal Update, Limited No-action Relief from Swap Data Reporting Rules Issued by CFTC). The relief provided by this no-action letter expires on December 31, 2013.

To qualify for the no-action relief, the SD or MSP must meet the following conditions:

On June 27, 2013, the CFTC issued No-action Letter 13-37 providing relief, subject to certain conditions, for any entity engaging in floor-trader activities that excludes from its calculation of its aggregate gross notional amount of swaps connected with its swap dealing activity for purposes of determining whether it is an SD under Commission Regulation 1.3(ggg)(4). Prior to the compliance date for the CFTC’s SEF rules (October 2, 2013), any swap that is submitted for clearing to a registered DCO need not count for purposes of making SD calculations under final Dodd-Frank CFTC rules if the firm in good faith intends to apply as a floor trader based on reasonable assumptions made regarding the future development of the cleared swap (for details on SD thresholds, see Practice Note, Is Your Client a Swap Dealer or Major Swap Participant? Breakdown of Final Dodd-Frank Definitional Rulemaking), provided that all of the following are satisfied:

To rely on the relief provided in Letter 13-37, an entity was required to file a claim with CFTC's Division of Swap Dealer and Intermediary Oversight (DSIO) before July 1, 2013. The relief provided in Letter 13-37 extends the relief previously provided in CFTC Letter 12-60, which was to expire on July 1, 2013. For details on the final CFTC SEF rules, see Legal Update, Final Dodd-Frank Swap Execution Facility (SEF) Rules: Good for the Market, But for Lawyers…?.

On June 26, 2013, the CFTC issued No-action Letter 13-38 providing relief for SDs and MSPs from the requirements of final swap trading relationship documentation rules under CFTC Regulation 23.504, for the following:

The relief is subject to certain conditions detailed in the letter, and remains in effect until:

The relief provided in Letter 13-38 extends the relief provided by CFTC Interim Final Rules issued on December 18, 2012 (see Legal Update, Further Compliance Delays for Dodd-Frank External Business Conduct and Other Swap Dealer Rules and Practice Note, Swap Dealers and MSPs: Final Dodd-Frank Internal Business Conduct (IBC) Rules on Documentation, Confirmation, Reconciliation and Compression.

On June 27, 2013, the CFTC issued No-action Letter 13-39, providing SDs with relief from certain EBCS rules in the context of FX intermediated prime brokerage arrangements, subject to the conditions and limitations set forth in the letter.

On June 27, 2013, the CFTC issued No-action Letter 13-40 which provides SDs and MSPs relief until August 23, 2013 from compliance with the portfolio reconciliation requirements under CFTC Regulation 23.502. The portfolio reconciliation rules require that swap counterparties engage in portfolio reconciliation (or provide opportunities for portfolio reconciliation) at regular intervals (see Practice Note, Swap Dealers and MSPs: Final Dodd-Frank Internal Business Conduct (IBC) Rules on Documentation, Confirmation, Reconciliation and Compression).

On June 26, 2013, the CFTC issued No-action Letter 13-31 relating to the terms that are included in portfolio reconciliations. Letter 13-31 identifies 11 data fields that may be excluded from portfolio reconciliations.

On June 28, 2013, the CFTC issued No-action Letter 13-41 providing reporting parties under Parts 20, 45 and 46 of the CFTC’s regulations with temporary relief from requirements to report certain identifying information regarding their swap counterparties in certain jurisdictions with particular privacy, secrecy and blocking laws. Letter 13-41 addresses Legal Entity Identifiers (LEIs), other identifying swap data fields under Part 45 (final SDR rules), Part 46 (final historical swap data reporting rules) and Part 20 (large swap trader counterparty identification rules). To avail themselves of the relief, reporting parties must meet specific criteria and conditions set out in Letter 13-41. Letter 13-41 permits reporting parties to fulfill their reporting obligations while acknowledging privacy, secrecy and blocking laws in certain non-US jurisdictions, provided that specific conditions are met. The relief provided for in Letter 13-41 expires no later than June 30, 2014. For information on the final swap data reporting rules under Parts 20, 45 and 46, see Practice Notes, US Derivatives Regulation: CFTC Swap Data Reporting and Recordkeeping Rules and US Derivatives Regulation: Practical Guide to Over-the-Counter (OTC) Swap Data Reporting. For information on required data fields under these rules, see The Dodd-Frank Act: CFTC Swap Data Reporting Required Data Fields Checklist.

The CFTC issued a series of no-action letters giving SDs and MSPs more time to comply with final Dodd-Frank derivatives rules in the areas of data reporting, business conduct standards, annual reports for compliance officers and portfolio reconciliation. For information on these no-action letters, see Legal Update, CFTC Issues No-action Letters Giving Swap Dealers More Time to Comply with Dodd-Frank Rules.