The CFTC Market Participants Division provided relief to a "limited purpose" swap dealer ("SD") from public financial disclosure requirements under CFTC Rule 23.105(i)(1) and (2) ("Public disclosure and nonpublic treatment of reports").
CFTC staff concluded:
- the SD was only an ancillary business unit of a larger privately held commercial agricultural business that was not otherwise required to disclose financial information publicly;
- the SD was predominantly used to accommodate agricultural customers because an "average of 90-95% of swap exposures were to non-financial commercial end-users"; and
- if forced to comply, the SD's parent company would need to either create a standalone subsidiary for the SD - which it determined to be economically impracticable - or limit its presence in the hedging commodity markets.
The relief is conditional on the SD (i) maintaining a limited purpose swap dealer designation, (ii) filing unaudited monthly financial reports and NFA-audited annual financial reports to the CFTC, (iii) disclosing on its website that it maintains two times the minimum regulatory capital requirement and (iv) providing five-year lookback financial information to all existing and potential swap dealing counterparties.
Primary Sources
- CFTC No-Action Letter 22-04: Re No-Action Position regarding the Public Disclosure of Financial Information under Swap Dealer Financial Reporting Requirements
- Company Request Letter to CFTC: Request for No-Action Relief from Public Disclosure of Financial Reports
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