The US Commodity Futures Trading Commission (CFTC) has issued a no-action letter, providing relief for swap dealers from having to comply with margin rules due to go into effect on February 4.
The CFTC’s Division of Swap Dealer and Intermediary Oversight (DSIO) says that it will not recommend enforcement action against swap dealers (SDs) that are subject to the margin requirements for non-centrally cleared OTC derivatives in the European Union (EMIR RTS) or for failure to comply with the CFTC’s final margin rule (Final Margin Rule).
The new deadline for firms having to comply with the margin rules will be May 8, 2017.
The CFTC says that it has been “diligently analysing” the European Commission’s (EC) request to declare the Emir RTS as equivalent to the Final Margin Rule so that substituted compliance can be implemented. Likewise, the EC is also pursuing an equivalence determination with respect to the Final Margin Rule, but has not yet completed this.
“Nevertheless, without a comparability determination by the CFTC with respect to the EMIR RTS (or an equivalence determination from the EU regulatory authorities with respect to the Final Margin Rule), starting February 4, 2017 many SDs operating in the EU will be required to comply with both the Final Margin Rule and the EMIR RTS.
“Thus, DSIO believes this relief is necessary to give SDs certainty about their regulatory obligations, while the CFTC undertakes its substituted compliance determination and the EC its equivalence decision,” says the CFTC in an issued statement.