The CFTC's Market Participants Division ("MPD") and Division of Market Oversight ("DMO") (collectively, the "Divisions") extended previously granted no-action relief (see here and here) aimed at ensuring regulatory continuity after the United Kingdom's departure from the European Union ("Brexit").
CFTC Letter 20-39 extends the relief provided under CFTC Letter 19-08. Specifically, the staff stated that it will not recommend enforcement actions (i) against registered swap dealers that comply with UK regulations transposed under the European Union (Withdrawal) Act of 2018 ("EU(W)A") and (ii) against:
- a multilateral trading facility ("MTF") or an organized trading facility ("OTF") designated as an "Eligible UK Facility" under the CFTC's 2017 MTF and OTF Order of Exemption (see previous coverage), for failing to register as a swap execution facility under Section 5h(a)(1) of the CEA and CFTC Rule 37.3(a)(1); or
- a counterparty subject to the CEA Section 2(h)(8) trade execution requirement, should the counterparty execute a swap subject to the requirement on an Eligible UK Facility.
The relief will expire at the earlier of (i) the effective date of an exemptive order issued under Section 5h(g) of the CEA or (ii) one year following the "Brexit Transition Period Expiration Date" (which is currently set at December 31, 2020, but may be modified).
CFTC Letter 20-40 extends the relief provided under CFTC Letter 19-09. Specifically, CFTC staff stated that it will consider providing "longstanding relief" under CFTC Letters 12-70 and 13-45, to:
- the UK as it applies to the EU;
- UK entities as it applies to EU entities;
- UK financial regulatory bodies as it applies to EU financial regulatory bodies; and
- UK regulations transposed under EU(W)A as it applies to corresponding EU regulations.
The relief goes into effect on the Brexit Transition Period Expiration Date.
Primary Sources
- CFTC No-Action Letter 20-39: Revised No-Action Relief in Connection With Certain Previously Granted Commission Determinations and Exemptions, in Response to the Withdrawal of the United Kingdom From the European Union
- CFTC No-Action Letter 20-40: Revised Extension to UK Entities of Regulatory Relief Previously Granted to European Union Entities in CFTC No-Action Letters: 12-70 and 13-45
- CFTC Press Release: CFTC Staff Extends Existing Brexit-Related Relief to Provide Market Certainty
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
