CFTC Further Implements Trade Execution Requirement 

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The Commodity Futures Trading Commission’s (CFTC or Commission) Division of Market Oversight (Division) announced further implementation of the trade execution requirement for certain interest rate and credit default swaps. The Division previously provided no-action relief for certain swaps required to be traded on a swap execution facility (SEF) or designated contract market (DCM) to the extent that those swaps were part of a package transaction. The Division has determined that further relief is appropriate to enable market participants the necessary time to fully comply with the trade execution requirement with respect to swap components of certain categories of package transactions.

Market participants will also have the opportunity to transition their trading of these swap components onto SEFs and DCMs.

The Division has tailored the relief by category—for example, SEFs and DCMs are provided with flexibility in offering methods of execution for swap components of certain package transactions via their trading systems, facilities, or platforms. Finally, with respect to certain categories of package transactions, the time-limited relief will enable the Division to gather data not previously available to the agency to further assess whether SEFs and DCMs can appropriately offer the capability to transact swap components of such package transactions via competitive means of execution.

Accordingly, the Division is issuing today CFTC No-Action Letter No. 14-137, providing the following phased compliance timeline below. This summary is intended to be used for reference only and does not represent any grant of no-action relief from the Commodity Exchange Act or the Commission’s regulations. Please refer to CFTC Letter 14-137 for the grant of Division relief.

Last spring, the Division, through two previously issued no-action letters, provided similar no-action relief for certain package transactions. The no-action relief for some of these package transactions expired and trading of the swap components for these package transactions are now subject to the trade execution requirement.

Source: CFTC- CFTC Further Implements Trade Execution Requirement

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