CFTC Staff Extends Temporary No-Action Letter

CFTC Staff Extends Temporary No-Action Letter Regarding Capital and Financial Reporting for Certain Non-U.S. Nonbank Swap Dealers

Washington, D.C. — The Commodity Futures Trading Commission’s Market Participants Division (MPD) today announced it had issued a temporary no-action letter extending CFTC Staff Letter No. 21-20 to nonbank swap dealers (SDs) domiciled in foreign jurisdictions that are the subject of a pending CFTC review for comparability determinations regarding capital and financial reporting requirements.

As part of the capital and financial reporting requirements for nonbank SDs, the Commission adopted a substituted compliance framework that permits covered nonbank SDs to rely on compliance with home country capital and financial reporting requirements in lieu of meeting all or parts of the Commission’s capital adequacy and financial reporting requirements, provided the Commission finds the home country requirements comparable to the CFTC’s requirements.

Through CFTC Staff Letter No. 22-10, issued today, CFTC staff is extending a no-action position to provisionally-registered nonbank SDs domiciled in Japan, Mexico, the United Kingdom, and the European Union, conditioned upon the nonbank SDs remaining in compliance with existing home-country capital and financial reporting requirements and submitting certain financial reporting information to the Commission.

The Commission recently published for public comment a proposed substituted compliance determination for nonbank SDs domiciled in Japan and continues to engage with foreign counterparts on the review of other comparability requests.  MPD is extending the no-action position previously issued in Staff Letter 21-20 to provide regulatory certainty to nonbank SDs that are the subject of pending capital comparability applications.

Today’s no-action letter was issued in response to a joint request received from the Securities Industry and Financial Markets Association, the Institute of International Bankers, and the International Swaps and Derivatives Association on behalf of their respective non-bank SD members who would otherwise be required to comply with the Commission’s capital and financial reporting requirements on October 6, 2022.  The no-action position will expire on the earlier of October 1, 2024, or if the Commission issues a final Capital Comparability Determination with respect to each jurisdiction.

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