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

– The Market Participant Division (MPD) of the Commodity Futures Trading Commission announced today that it has issued a Temporary No Action Letter extending CFTC Staff Letter No. 21-20 to swap dealers non-bank (SD) domiciled in foreign jurisdictions that are the subject of ongoing CFTC review of comparability determinations regarding capital and financial reporting requirements.

As part of the capital and financial reporting requirements for non-bank DSs, the Commission has adopted an alternative compliance framework that allows covered non-bank DSs to rely on compliance with capital requirements and financial reporting of the country of origin in lieu of meeting all or part of the Commission’s capital adequacy requirements and financial reporting requirements, provided that the Commission finds the requirements of the country of origin comparable to CFTC requirements.

Through CFTC Staff Letter No. 22-10, issued today, CFTC Staff extends a no-action stance to provisionally registered non-bank SDs domiciled in Japan, Mexico, the United United and European Union, provided non-bank SDs remain in compliance with home country capital and financial reporting requirements and submission of certain financial reporting information to the Commission.

The Commission recently released for public comment a proposal for a substituted compliance determination for Japan-domiciled non-bank SDs and continues to engage with its overseas counterparts on consideration of other comparability requests. MPD extends the no-action position previously issued in Staff Letter 21-20 to provide regulatory certainty to non-bank SDs that are subject to 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 October 1, 2024 or if the Commission issues a final determination of the comparability of capital with respect to each jurisdiction.

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