In its Letter No. 18-13 dated May 16, 2018, the Commodity Futures Trading Commission's (CFTC) Division of Swap Dealer and Intermediary Oversight (DSIO) granted no-action relief to non-United States persons who enter into swaps with certain international financial institutions (IFIs)1.

The letter addresses the applicability of the cross-border provisions of the Commodity Exchange Act (CEA) and the rules and regulations promulgated thereunder with respect to the level of swap dealing activity that would subject non-US persons to register as a "swap dealer" or "major swap participant" under the CEA2. Specifically, in citing the CFTC's general statement of policy with respect to cross-border matters (the "Cross-Border Guidance")3, Letter No. 18-13 describes instances in which non-US swap counterparties of such dealers would be considered US persons under the Cross-Border Guidance.

Should such non-US swap counterparties be considered US persons, the letter notes that the swap dealing activity and swap positions of a non-US dealer with such non-US counterparties would need to be counted in determining whether such dealer would meet the thresholds that would require it to register with the CFTC as a "swap dealer" or "major swap participant." To the extent that an IFI was incorporated or had its principal place of business in the United States, or if an IFI were guaranteed by a US person, it could be considered to be a US person for purposes of the Cross-Border Guidance. In such a case, a non-US dealer's swaps with such IFI would need to be included in the determination of the dealer's potential requirement to register as a "swap dealer" or "major swap participant" under the CEA.

Noting that the CFTC had previously excepted certain IFIs from the application of CFTC regulations4, Letter No. 18-13 discusses the unique attributes and international status of IFIs, including the public policy affecting an IFI's ability to enter into transactions in a number of countries in connection with promoting global economic development5.  The letter further recognizes that, under the Cross-Border Guidance, the CFTC generally would not apply transaction-level rules to swaps between non-US swap dealers and certain IFIs, effectively treating such IFIs as non-US persons for purposes of the application of such rules6

As a result of its analysis of the Cross-Border Guidance and its reference to relief provided by the CFTC in similar contexts, the DSIO stated that no-action relief was warranted in the case of non-US persons that are neither affiliates nor conduit affiliates of US persons if such non-US person does not include swaps entered into with IFI counterparties for purposes of determining whether such non-US person would be deemed to be a "swap dealer" or "major swap participant" under the CEA.

Letter No. 18-13 is available on the CFTC's website, which you can access by clicking here.


1. The International Monetary Fund, International Bank for Reconstruction and Development, International Development Association, International Finance Corporation, Multilateral Investment Guarantee Agency, European Bank for Reconstruction and Development, African Development Bank, African Development Fund, Asian Development Bank, Inter-American Development Bank, Bank for Economic Cooperation and Development in the Middle East and North Africa, Inter-American Development Bank, Bank for Economic Cooperation and Development in the Middle East and North Africa, Inter-American Development Bank, Bank for Economic Cooperation and Development in the Middle East and North Africa, Inter-American Investment Corporation, Council of Europe Development Bank, Nordic Investment Bank, Caribbean Development Bank, European Investment Bank, European Investment Fund and North American Development Bank.

The foregoing IFIs, with the exception of the North American Development Bank, are all referenced in the Cross-Border Guidance.

2. See the definitions of "swap dealer" and "major swap participant" in 17 C.F.R. §1.3

3. Interpretive Guidance and Policy Statement Regarding Compliance with Certain Swap Regulations, 78 FR at 45292 (July 26, 2013)

4. See CFTC Letter No. 18-13 at 4-5.

5. See id at 4.

6. See id at 5.

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