CFTC event contracts will not take action: previous beneficiaries apply, and new applications may be added to the appendix

On May 14, the Market Oversight Division and the Division of Clearing and Risk of the CFTC (U.S. Commodity Futures Trading Commission) announced that they have issued a no-action letter regarding swap-related recordkeeping requirements and full collateralization event derivatives contract trading data reporting to the Swap Data Repository (SDR), and that they do not recommend enforcement against designated contract markets (DCMs), derivatives clearing organizations (DCOs), and their participants. The previously covered beneficiaries continue to apply, and new entities may apply to be added to the appendix of the letter.

Scope of Confirmation Exemptions for the No-Action Letter

According to the CFTC’s official announcement, today’s no-action stance covers the following two categories:

Swap-related recordkeeping requirements: DCMs, DCOs, and their participants fail to comply with swap-related recordkeeping requirements—relevant divisions do not recommend taking enforcement action on this

Swap data repository reporting: DCMs, DCOs, and their participants fail to report to the SDR data related to full collateralization event derivatives contract trading—relevant divisions do not recommend taking enforcement action on this

The no-action positions above are subject to all terms of the no-action letter issued today.

Rules for Previously Covered Beneficiaries and New Application Procedure

According to the procedure arrangements confirmed in the CFTC’s official announcement:

Previously covered beneficiaries: All beneficiaries who have previously received no-action letters regarding similar contract data reporting continue to apply today’s position and do not need to reapply.

New entity application process: Entities seeking to list or clear similar contracts may apply to obtain the same no-action position as in today’s letter. If the relevant division approves the application, the applicant will be formally added to the appendix of today’s no-action letter. This mechanism allows the relevant divisions to avoid repeatedly issuing separate letters with the same content, while also ensuring consistent treatment for both new and existing applicants.

Expected Next Steps Confirmed by the Relevant Divisions

The CFTC’s official announcement indicates that the relevant divisions expect to receive the following types of subsequent applications:

· No-action letter modification requests reflecting amendments to designated order(s) of a DCM

· Modification requests reflecting changes to a DCO

· Other modification requests triggered by market developments

The purpose of today’s no-action letter is to establish a unified processing framework to address the above subsequent matters.

Frequently Asked Questions

What does the CFTC no-action letter (No-Action Letter) represent legally?

A CFTC no-action letter is a statement issued by a specific division (not by the entire Commission) indicating that the division does not recommend enforcement action against specific conduct. Such letters do not modify existing regulations and do not constitute a formal legal confirmation of the legality of the relevant conduct, but they provide market participants with an operational basis to avoid threats of enforcement under specific conditions.

Which types of contracts does today’s no-action letter specifically apply to?

According to the CFTC’s official announcement, today’s letter applies to swap data reporting and recordkeeping requirements related to “fully collateralized event derivatives contract trading.” Entities seeking to include specific contracts within this scope may submit applications according to the procedure; after review by the relevant divisions, a decision will be made on whether to add them to the appendix.

How do I apply to be added to the appendix of today’s no-action letter?

According to the CFTC’s official announcement, entities seeking to list or clear similar contracts may directly submit an application to the relevant CFTC division for the same no-action position as in today’s letter. If the application is approved, the applicant will be formally added to the appendix of today’s no-action letter, and the CFTC will not need to issue a separate standalone letter.