On October 7, 2016, the US Commodity Futures Trading Commission Division of Market Oversight (DMO) extended time-limited no-action relief to swap execution facilities from certain requirements in the definition of "block trade" in CFTC regulations. Specifically, CFTC regulation section 43.2 defines a "block trade" as, among other things, a publicly reportable swap transaction that "[o]ccurs away from the registered [SEF's] or [DCM's] trading system or platform and is executed pursuant to the registered [SEF's] or [DCM's] rules and procedures."
Subject to certain conditions, the no-action letter extends time-limited relief to SEFs from the "occurs away" requirement under section 43.2 until November 15, 2017 before 11:59 p.m., Eastern Standard Time, or the effective date of any CFTC action with respect to the issues discussed in this no-action letter. Among other things, the extension will allow the DMO to continue to evaluate best practices and a more permanent solution to the issues involved in screening block trade orders for compliance with risk-based limits including, if appropriate, amendments to CFTC regulations.
Parties to a swap who do not use the SEF functionalities this letter provides must ensure the required pre-execution credit check occurs.
The CFTC staff letter is available at: http://www.cftc.gov/idc/groups/public/@lrlettergeneral/documents/letter/16-74.pdf.
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