Advisory Pertaining to the Effective Date of the Clearing Exemption for Swaps Between Certain Affiliated Entities.

Summary: Advisory Pertaining to the Effective Date of the Clearing Exemption for Swaps Between Certain Affiliated Entities.

CFTC Staff Advisory No. 13-23

Other Written Communication

June 7, 2013

Division of Clearing and Risk

DIVISION OF CLEARING AND RISK ADVISORY

EFFECTIVE DATE OF THE CLEARING EXEMPTION FOR SWAPS BETWEEN

CERTAIN AFFILIATED ENTITIES

On April 11, 2013, the Commodity Futures Trading Commission (Commission)

published in the Federal Register the final rule “Clearing Exemption for Swaps Between Certain

Affiliated Entities,” to exempt swaps between eligible affiliate counterparties within a corporate

group from the clearing requirement under the Commodity Exchange Act (CEA or Act), enacted

by Title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank

Act).1 The regulations include specific conditions, as well as reporting requirements, that

eligible affiliate counterparties must satisfy in order to elect the inter-affiliate exemption from

required clearing. The effective date of the rule, as listed in the Federal Register, was June 10,

2013.2 The preamble to the final rule provides that “[t]he clearing requirement under section

2(h)(1)(A) of the CEA and part 50 of the Commission’s regulations shall not apply to a swap

executed between affiliated counterparties that have the status of eligible affiliate counterparties,

as defined in § 50.52(a), and elect not to clear such swap until the effective date of the

rulemaking.”3 Due to certain requirements provided for by the Congressional Review Act,4 the

effective date of the final rule has been automatically extended by operation of law, to June 18,

2013

swap

executed between affiliated counterparties that have the status of eligible affiliate counterparties,

as defined in § 50.52(a), and elect not to clear such swap until the effective date of the

rulemaking.”3 Due to certain requirements provided for by the Congressional Review Act,4 the

effective date of the final rule has been automatically extended by operation of law, to June 18,

2013. Accordingly, the clearing requirement under section 2(h)(1)(A) of the CEA and part 50 of

the Commission’s regulations shall not apply to a swap executed between affiliated

counterparties that have the status of eligible affiliate counterparties under the final rule, until

1 Clearing Exemption for Swaps Between Certain Affiliated Entities, 78 FR 21749 (Apr. 11, 2013).

2 Id. at 21750.

3 Id. at 27769.

4 5 U.S.C. § 801(a)(3)(A).

June 18, 2013, the new effective date of the final rule “Clearing Exemption for Swaps Between

Certain Affiliated Entities.”

Issued in Washington, D.C. on June 7, 2013, by the Division of Clearing and Risk

__________________________________

ANANDA RADHAKRISHNAN

DIRECTOR