CFTC Announces Cross-Border Substituted Compliance Determinations, Provides Limited Phase-In for Some Swap Requirements

On Friday, just ahead of the expiration of the CFTC’s exemptive order delaying the applicability of some CFTC swap regulations for non-U.S. swap dealers and foreign branches of U.S. swap dealers, the CFTC issued a press release and summary table announcing comparability determinations that will allow non-U.S. swap dealers and foreign branches of U.S. swap dealers to comply with local law instead of CFTC requirements in cases where substituted compliance is available under the CFTC’s cross-border guidance.  The CFTC’s actions also extend to non-U.S. MSPs and foreign branches of U.S. MSPs.  The press release states that the CFTC has made comparability determinations for a “broad range of entity-level requirements” for the six jurisdictions—Australia, Canada, the European Union, Hong Kong, Japan and Switzerland—that requested substituted compliance determinations.  The press release also states that the CFTC has issued comparability determinations for some transaction-level requirements for the EU and Japan. 

Contemporaneously with issuing the press release, the CFTC published two no-action letters (here and here) providing temporary relief for non-U.S. swap dealers in certain jurisdictions from compliance with swap data reporting rules under Parts 45 and 46 and certain internal business conduct rules under Part 23 of the CFTC’s regulations.  While the CFTC deferred the decision to make a comparability determination with respect to such swap data reporting requirements, as it continues to review the issue, its reporting no-action relief will allow non-U.S. swap dealers that do not have a U.S. ultimate parent to delay reporting transactions with non-U.S. persons for several months.

Where the CFTC did not provide for comparability or timing relief, firms will need to comply with the relevant requirements immediately.

We have prepared charts, available on our website, which summarize the comparability determinations and the timing relief, based on the press release, summary table and the two no-action letters.  The charts also reflect information contained in the statement issued by Commissioner O’Malia.  The text of the comparability determinations is not yet available, and the CFTC may publish other explanatory information in the coming days.  We intend to update the charts as additional information, including the text of the determinations, becomes available.

Summary Charts of Comparability Determinations >

Follow us on Twitter >