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The CFTC has published a draft no-action letter regarding certain Dodd-Frank provisions.  Certain proposed exemptive relief  and the staff draft no-action letter, taken together, would provide greater clarity during the transition to the new regulatory framework for swaps in light of the general effective date in Title VII of the Dodd-Frank Act of July 16, 2011.

Specifically, the draft no-action letter provides that the Division of Market Oversight and the Division of Clearing and Intermediary Oversight would not recommend that the CFTC commence an enforcement action against any person for failure to comply with:

  • ·        Section 4s(l) of the Commodity Exchange Act, or CEA, which imposes upon swap dealers and major swap participants certain segregation requirements with respect to collateral for uncleared swaps;
  • ·        Section 5b(a) of the CEA, which requires a derivatives clearing organization to register with the CFTC in order to clear swaps; and
  • ·        Section 4s(k) of the CEA, which provides for the duties and designation of a chief compliance officer for swap dealers and major swap participants. The proposed staff no-action letter would not limit the CFTC’s applicable anti-fraud and anti-manipulation authority.

Under the terms of the draft no-action letter, relief would automatically expire no later than December 31, 2011.

Check frequently for updates on the Dodd-Frank Act and other important securities law matters.


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