No-action position for intended-to-be-cleared swaps traded on Eligible UK Trading Venues (as defined in the letter).

Summary: No-action position for intended-to-be-cleared swaps traded on Eligible UK Trading Venues (as defined in the letter).

CFTC Letter No. 25-49 No-Action December 18, 2025

U.S. COMMODITY FUTURES TRADING COMMISSION

Three Lafayette Centre, 1155 21st Street, NW, Washington, DC 20581

www.cftc.gov

Market Participants

Division

Thomas J. Smith

Acting Director

Re:

Extension of No-Action Position for Swaps Intended to be Cleared and Traded on

Eligible UK Trading Venues

Ladies and Gentlemen:

The Market Participants Division (“MPD”) of the Commodity Futures Trading Commission

(“CFTC” or “Commission”) is issuing this letter in light of the recent amendments to certain of

the Commission’s business conduct and swap documentation requirements applicable to swap

dealers and major swap participants (the “EBCS STRD Final Rule” or “Final Rule”) adopted on

December 18, 2025.1 Among other things, the Final Rule codified, with certain modifications, the

no-action position in CFTC Staff Letter 23-01 (“Letter 23-01”)2 issued by MPD. That position

applies to swaps of a type accepted for clearing by a derivatives clearing organization registered

with the Commission (“DCO”)3 or a clearing organization that has been exempted from

registration by the Commission pursuant to section 5b(h) of the Commodity Exchange Act

(“CEA”)4 (“Exempt DCO” and, together with a DCO, an “Eligible DCO”) on the date of

execution and intended to be cleared contemporaneously with execution (“ITBC Swaps”).

This letter will supersede Letter 23-01 in its entirety as of the effective date of the EBCS STRD

Final Rule. No person may rely upon Letter 23-01 after the effective date of the Final Rule.

I.

Background

1 The Final Rule is available on the Commission’s website, CFTC.gov.

2 CFTC staff letters are available on the Commission’s website at

https://www.cftc.gov/LawRegulation/CFTCStaffLetters/index.htm. See Letter 23-01 (Feb

in its entirety as of the effective date of the EBCS STRD

Final Rule. No person may rely upon Letter 23-01 after the effective date of the Final Rule.

I.

Background

1 The Final Rule is available on the Commission’s website, CFTC.gov.

2 CFTC staff letters are available on the Commission’s website at

https://www.cftc.gov/LawRegulation/CFTCStaffLetters/index.htm. See Letter 23-01 (Feb. 1, 2023) (expanding the

scope of swaps covered in the no-action position taken in CFTC Staff Letter 13-70 (“Letter 13-70”)), available at

https://www.cftc.gov/csl/23-01/download; see also Letter 13-70 (Nov. 15, 2013), available at

https://www.cftc.gov/sites/default/files/idc/groups/public/@lrlettergeneral/documents/letter/13-70.pdf.

3 “Derivatives clearing organization” is defined in section 1a(15) of the CEA, 7 U.S.C. § 1a(15), and Commission

regulation 1.3, 17 CFR 1.3. For purposes of this letter, “DCO” means a derivatives clearing organization as defined

in Commission regulation 1.3 and registered with the Commission as such.

4 7 U.S.C. § 7a-1(h).

ITBC Swaps – Eligible UK Trading Venues

2

A.

Relevant SD and MSP Regulatory Obligations

Business Conduct Standards

The Commission’s business conduct requirements for swap dealers (“SDs”) and major swap

participants (“MSPs”)5 under subpart H of part 23 of the Commission’s regulations, which set

forth business conduct standards for SDs and MSPs in their dealings with counterparties (the

“External BCS”),6 require SDs and MSPs to provide or obtain specific information from their

counterparties, to obtain specific representations in writing from their counterparties, and to

perform certain due diligence inquiries with respect to their counterparties prior to entering into

(or in some cases, offering to enter into) a swap with such counterparties.7 Certain safe harbors

under the External BCS permit SDs and MSPs to rely on written representations from their

counterparties and standardized disclosures, each of which may require amendments or

suppleme

rties, and to

perform certain due diligence inquiries with respect to their counterparties prior to entering into

(or in some cases, offering to enter into) a swap with such counterparties.7 Certain safe harbors

under the External BCS permit SDs and MSPs to rely on written representations from their

counterparties and standardized disclosures, each of which may require amendments or

supplements to an SD’s or an MSP’s relationship documentation with such counterparties, prior to

entering into a swap with such counterparties.8 In addition to the safe harbors, many of the

External BCS do not apply either (i) when the SD or MSP does not know the identity of the

counterparty to a swap prior to the execution of the swap, or (ii) when the swap is initiated on a

swap execution facility (“SEF”)9 or designated contract market (“DCM”), and the SD or MSP

does not know the identity of the counterparty to a swap prior to the execution of the swap.10

5 There are currently no MSPs registered with the Commission; however, because MSPs are subject to regulatory

requirements relevant to this letter, MPD is including MSPs within the scope of this letter.

6 17 CFR 23.400–23.451. See generally Business Conduct Standards for SDs and MSPs with Counterparties, 77 FR

9734 (Feb. 17, 2012).

7 Commission regulation 23.402(b), 17 CFR 23.402(b) (requiring SDs to obtain essential facts about their

counterparty prior to execution of a transaction); 23.430(a), 17 CFR 23.430(a) (requiring SDs and MSPs to verify

that a counterparty meets the eligibility standards for an eligible contract participant before offering to enter into or

entering into a swap with such counterparty); 23.431(a), 17 CFR 23.431(a) (requiring SDs and MSPs to provide

material information concerning a swap to certain types of counterparties at a reasonably sufficient time prior to

entering into the swap); 23.431(b), 17 CFR 23.431(b) (requiring SDs to provide notice to certain types of

counterparties that they can request and consult on the design of a

ntering into a swap with such counterparty); 23.431(a), 17 CFR 23.431(a) (requiring SDs and MSPs to provide

material information concerning a swap to certain types of counterparties at a reasonably sufficient time prior to

entering into the swap); 23.431(b), 17 CFR 23.431(b) (requiring SDs to provide notice to certain types of

counterparties that they can request and consult on the design of a scenario analysis; this requirement will be

amended as of the effective date of the Final Rule); 23.431(d), 17 CFR 23.431(d) (requiring SDs and MSPs to

provide notice to certain types of counterparties of the right to receive the daily mark from a DCO for cleared

swaps); 23.432, 17 CFR 23.432 (requiring SDs and MSPs to provide notice to certain types of counterparties of the

right to select clearing and the DCO on which a swap is to be cleared); 23.434, 17 CFR 23.434 (requiring SDs,

which recommend a swap to certain types of counterparties, to have a reasonable basis to believe that the swap is

suitable for the counterparty); 23.440, 17 CFR 23.440 (requiring SDs that act as an advisor to a Special Entity, as

defined in Commission regulation 23.401, 17 CFR 23.401, to act in such entity’s best interest when the SD is

recommending a swap tailored to the needs of the Special Entity or a trading strategy involving such a swap);

23.450, 17 CFR 23.450 (requiring SDs and MSPs to inquire into the knowledge and status of a representative of a

counterparty that is a Special Entity); and 23.451, 17 CFR 23.451 (prohibiting SDs from entering into swaps with

governmental Special Entities if it has made political contributions to an official of such entity).

8 Commission regulations 23.402(d), (e), and (f), 17 CFR 23.402(d), (e), and (f).

9 “Swap execution facility” is defined in section 1a(50) of the CEA, 7 U.S.C. § 1a(50), and Commission regulation

1.3, 17 CFR 1.3. For purposes of this letter, “SEF” means a swap execution facility as defined in Commission

regulation 1.3 and registered with the Commission as such

to an official of such entity).

8 Commission regulations 23.402(d), (e), and (f), 17 CFR 23.402(d), (e), and (f).

9 “Swap execution facility” is defined in section 1a(50) of the CEA, 7 U.S.C. § 1a(50), and Commission regulation

1.3, 17 CFR 1.3. For purposes of this letter, “SEF” means a swap execution facility as defined in Commission

regulation 1.3 and registered with the Commission as such.

10 Commission regulations 23.402(b) and (c), 17 CFR 23.402(b) and (c) (requiring SDs and MSPs, as applicable, to

obtain and retain certain information only about each counterparty whose identity is known to the SD or MSP prior

to the execution of the transaction); 23.430(e), 17 CFR 23.430(e) (not requiring SDs and MSPs to verify

ITBC Swaps – Eligible UK Trading Venues

3

Swap Trading Relationship Documentation

In addition, documentation standards for SDs and MSPs have been adopted by the Commission

pursuant to sections 4s(i)(1) and 4s(h) of the CEA.11 Specifically, Commission regulation 23.504

requires that an SD or MSP execute swap trading relationship documentation, meeting the

requirements of the rule with a counterparty, prior to or contemporaneously with entering into a

swap transaction with such counterparty (“STRD Requirement”).12 Similar to the External BCS,

Commission regulation 23.504 contains an exception to the requirement that an SD or MSP

execute swap trading relationship documentation with a counterparty prior to or

contemporaneously with entering into a swap transaction with such counterparty. The exception

in Commission regulation 23.504(a)(1) states that such documentation is not required with respect

to swaps executed on a DCM or anonymously on a SEF if such swaps are cleared by a DCO and

all terms of the swaps conform to the rules of the DCO and Commission regulation 39.12(b)(6).13

B

prior to or

contemporaneously with entering into a swap transaction with such counterparty. The exception

in Commission regulation 23.504(a)(1) states that such documentation is not required with respect

to swaps executed on a DCM or anonymously on a SEF if such swaps are cleared by a DCO and

all terms of the swaps conform to the rules of the DCO and Commission regulation 39.12(b)(6).13

B.

Letter 13-70

In 2013, swap market participants submitted requests to the Division of Swap Dealer and

Intermediary Oversight (“DSIO”) (now MPD) to issue a no-action letter with respect to the

External BCS and certain documentation requirements under Commission regulation 23.504 as

applied to swaps of a type accepted for clearing by a DCO and executed with the intention to be

cleared on a DCO contemporaneously with execution. The market participants argued that for

cleared swaps, especially those executed on a SEF or DCM:

(1)

There is no ongoing relationship between the SD and its counterparty so there is no need

for the onboarding information or representations under Commission regulation 23.402,

nor swap trading relationship documentation, even if the SD knows the identity of its

counterparty prior to execution;

(2)

Such swaps are sufficiently standardized, and information about such swaps is available

from sources other than an SD, such that there should be no need for the SD to make

counterparty eligibility when a transaction is initiated on a DCM, or on a SEF when the SD or MSP does not know

the identity of the counterparty prior to execution); 23.431(c), 17 CFR 23.431(c) (not requiring disclosure of

material information about a swap, if initiated on a DCM or SEF and the SD or MSP does not know the identity of

the counterparty prior to execution (contra general prohibition of fraudulent, deceptive, or manipulative practices

under Commission regulation 23.410, 17 CFR 23.410)); 23.450(h), 17 CFR 23.450(h) (not requiring SDs and MSPs

to have a reasonable basis to believe that a Special Ent

of

material information about a swap, if initiated on a DCM or SEF and the SD or MSP does not know the identity of

the counterparty prior to execution (contra general prohibition of fraudulent, deceptive, or manipulative practices

under Commission regulation 23.410, 17 CFR 23.410)); 23.450(h), 17 CFR 23.450(h) (not requiring SDs and MSPs

to have a reasonable basis to believe that a Special Entity has a qualified, independent representative, if the

transaction with the Special Entity is initiated on a DCM or SEF and the SD or MSP does not know the identity of

the Special Entity prior to execution); and 23.451(b)(2)(iii), 17 CFR 23.451(b)(2)(iii) (not applying the prohibition

on entering into swaps with a governmental Special Entity within two years after any contribution to an official of

such governmental Special Entity, if the swap is initiated on a DCM or SEF and the SD does not know the identity

of the entity prior to execution).

11 7 U.S.C. § 6s(i)(1) and (h).

12 Commission regulation 23.504(a)(2), 17 CFR 23.504(a)(2).

13 17 CFR 39.12(b)(6). The exception in Commission regulation 23.504(a)(1) will be amended to expand the

exception to include ITBC Swaps as defined in the Final Rule as of the effective date of the Final Rule.

ITBC Swaps – Eligible UK Trading Venues

4

disclosures of material risks and characteristics, no concerns about institutional suitability

determinations, and no concerns about SDs acting as advisors or counterparties to Special

Entities;

(3)

Because both parties to the swaps intend the swaps to be cleared and to face the DCO for

the life of the swaps, there is no regulatory purpose to be served by the notices required of

SDs regarding the right to clear the swaps, the right to receive a daily mark from the DCO,

or the right to select the DCO; and

concerns about SDs acting as advisors or counterparties to Special

Entities;

(3)

Because both parties to the swaps intend the swaps to be cleared and to face the DCO for

the life of the swaps, there is no regulatory purpose to be served by the notices required of

SDs regarding the right to clear the swaps, the right to receive a daily mark from the DCO,

or the right to select the DCO; and

(4)

When such swaps are executed anonymously, there should be no concerns about political

contributions by SDs to governmental Special Entities in return for swap business.

Market participants argued that SDs’ compliance with these External BCS was creating roadblocks

to efficient use of cleared swaps, especially for asset managers seeking to execute large trades

anonymously with the intention of allocating parts of the trades to multiple accounts post-clearing.

In response to the requests, DSIO issued Letter 13-70. In Letter 13-70, DSIO took a no-action

position with respect to a list of External BCS requirements and the STRD Requirement under

Commission regulation 23.504, with respect to swaps that were intended to be submitted for

clearing contemporaneously with execution, commonly known as “intended-to-be-cleared swaps.”

The staff’s no-action position in Letter 13-70 was subject to certain conditions, contingent on

certain aspects of the swap, including whether or not the SD or MSP knows the identity of the

counterparty prior to execution of the swap, whether or not the swap is executed on or subject to

the rules of a SEF or DCM, and whether or not the swap was, as of the date of issuance of Letter

13-70 (i.e., November 15, 2013), of a type accepted for clearing by a DCO or subject to a

mandatory clearing determination by the Commission.

C

whether or not the SD or MSP knows the identity of the

counterparty prior to execution of the swap, whether or not the swap is executed on or subject to

the rules of a SEF or DCM, and whether or not the swap was, as of the date of issuance of Letter

13-70 (i.e., November 15, 2013), of a type accepted for clearing by a DCO or subject to a

mandatory clearing determination by the Commission.

C.

Exempt SEFs and Exempt DCOs

Exempt SEFs

Section 5h(g) of the CEA authorizes the Commission to exempt, conditionally or unconditionally,

a swap execution facility from registration, if the Commission finds that the facility is “subject to

comparable, comprehensive supervision and regulation on a consolidated basis by … the

appropriate governmental authorities in the home country of the facility.” After the issuance of

Letter 13-70, the Commission issued exemptions from swap execution facility registration to

ITBC Swaps – Eligible UK Trading Venues

5

facilities for the trading or processing of swaps14 from the European Union (“EU”),15 Singapore,16

and Japan.17 Further, in response to the withdrawal of the United Kingdom (“UK”) from the EU,

commonly referred to as “Brexit,” CFTC staff issued a no-action letter for certain UK MTFs and

OTFs to maintain the status quo of the EU Exemptive Order while the Commission works on a

determination for UK authorized MTFs and OTFs under section 5h(g) of the CEA.18 Any facilities

for the trading or processing of swaps that, as of any date of determination, are exempt from

registration as a swap execution facility under section 5h(g) of the CEA, including, without

limitation, any Exempt EU Trading Venues, Exempt SG Trading Venues, or Exempt Japan Trading

Venues, or is an Eligible UK Trading Venue, is an “Exempt SEF” on such date for purposes of the

discussion of Letter 23-01 below

ding or processing of swaps that, as of any date of determination, are exempt from

registration as a swap execution facility under section 5h(g) of the CEA, including, without

limitation, any Exempt EU Trading Venues, Exempt SG Trading Venues, or Exempt Japan Trading

Venues, or is an Eligible UK Trading Venue, is an “Exempt SEF” on such date for purposes of the

discussion of Letter 23-01 below.

14 Information related to the exemption of foreign swap trading facilities from swap execution facility registration is

available at https://www.cftc.gov/International/ForeignMarketsandProducts/ExemptSEFs.

15 On December 8, 2017, the Commission issued an Order of Exemption with respect to multilateral trading facilities

(“MTFs”) and organised trading facilities (“OTFs”) authorized in the EU (the “EU Exemptive Order”). See EU

Exemptive Order, as most recently amended by the Third Amendment to Appendix A to Order of Exemption

(October 26, 2022), available at

https://www.cftc.gov/media/7896/EuropeanUnionThirdAmendmentAppendixA_CEASection5hgOrder/download.

The EU Exemptive Order exempts each of the MTFs and OTFs listed in Appendix A thereto, as such Appendix A

may be amended by the Commission from time to time (the “Exempt EU Trading Venues”), from registration with

the Commission as a swap execution facility.

16 On March 13, 2019, the Commission issued an Order of Exemption with respect to approved exchanges (“AEs”)

and recognized market operators (“RMOs”) authorized in Singapore (the “SG Exemptive Order,” available at

https://www.cftc.gov/sites/default/files/2019-03/SingaporeCEASection5hgOrder.pdf), as most recently amended by

the “Third Amendment to Appendix A to Order of Exemption,” dated July 31, 2024 (available at

https://www.cftc.gov/media/11046/SingaporeThirdAmendmentAppendixA_CEASection5hgOrder/download)

cognized market operators (“RMOs”) authorized in Singapore (the “SG Exemptive Order,” available at

https://www.cftc.gov/sites/default/files/2019-03/SingaporeCEASection5hgOrder.pdf), as most recently amended by

the “Third Amendment to Appendix A to Order of Exemption,” dated July 31, 2024 (available at

https://www.cftc.gov/media/11046/SingaporeThirdAmendmentAppendixA_CEASection5hgOrder/download).

The SG Exemptive Order exempts each of the AEs and RMOs listed in Appendix A thereto, as such Appendix A

may be amended by the Commission from time to time (the “Exempt SG Trading Venues”), from registration with

the Commission as a swap execution facility.

17 On July 11, 2019, the Commission issued an Order of Exemption with respect to electronic trading platforms

(“ETPs”) registered in Japan (the “Japan Exemptive Order” and, together with the EU Exemptive Order and the

SG Exemptive Order, the “SEF Exemptive Orders,” available at

https://www.cftc.gov/media/2216/JapaneseCEASection5hgOrder/download).

The Japan Exemptive Order exempts each ETP listed in Appendix A thereto, as such Appendix A may be amended

by the Commission from time to time (the “Exempt Japan Trading Venues”), from registration with the

Commission as a swap execution facility.

18 On December 1, 2022, CFTC staff issued Staff Letter 22-16 (“Letter 22-16”), a no-action letter providing a no-

action position to UK entities related to Brexit, including a no-action position for certain UK authorized MTFs and

OTFs. See CFTC Staff Letter No. 22-16 (Dec. 1, 2022), available at https://www.cftc.gov/csl/22-16/download. On

August 28, 2024, CFTC staff issued Staff Letter 24-11 (“Letter 24-11”), which is the most recent no-action letter

and extends a no-action position provided to UK entities in Letter 22-16. See CFTC Staff Letter 24-11 (Aug. 28,

2024), available at https://www.cftc.gov/csl/24-11/download

Fs. See CFTC Staff Letter No. 22-16 (Dec. 1, 2022), available at https://www.cftc.gov/csl/22-16/download. On

August 28, 2024, CFTC staff issued Staff Letter 24-11 (“Letter 24-11”), which is the most recent no-action letter

and extends a no-action position provided to UK entities in Letter 22-16. See CFTC Staff Letter 24-11 (Aug. 28,

2024), available at https://www.cftc.gov/csl/24-11/download.

For purposes of Letter 24-11 (superseding Letter 22-16), an “Eligible UK Trading Venue” means an MTF or OTF

that is (i) authorized within the UK and (ii) listed in Appendix A to Letter 24-11 (superseding Appendix A to Letter

22-16); provided, however, to the extent this no-action position is amended or extended, only those MTFs and OTFs

included in the most recent amendment or extension (or its successor) shall be an Eligible UK Trading Venue.

ITBC Swaps – Eligible UK Trading Venues

6

Exempt DCOs

Similarly, section 5b(h) of the CEA authorizes the Commission to exempt, conditionally or

unconditionally, a derivatives clearing organization from registration, if the Commission finds that

the derivatives clearing organization is “subject to comparable, comprehensive supervision and

regulation by… the appropriate government authorities in the home country of the organization.”19

After the issuance of Letter 13-70 and prior to the issuance of Letter 23-01, the Commission issued

exemptions from registration to four derivatives clearing organizations:20 ASX Clear (Futures) Pty

Limited (“ASX”);21 Japan Securities Clearing Corporation (“JSCC”);22 Korea Exchange, Inc.

(“KRX”);23 and OTC Clearing Hong Kong Limited (“OTC Clear”).24 Any derivatives clearing

organization that, as of any date of determination, is exempt from registration as a derivatives

clearing organization under section 5b of the CEA, including, without limitation, ASX, JSCC,

KRX, and OTC Clear, is an Exempt DCO on such date for purposes of the discussion of Letter

23-01 below.25

19 7 U.S.C. § 7a-1(h)

earing Hong Kong Limited (“OTC Clear”).24 Any derivatives clearing

organization that, as of any date of determination, is exempt from registration as a derivatives

clearing organization under section 5b of the CEA, including, without limitation, ASX, JSCC,

KRX, and OTC Clear, is an Exempt DCO on such date for purposes of the discussion of Letter

23-01 below.25

19 7 U.S.C. § 7a-1(h).

20 Information related to the exemption of derivatives clearing organization registration is available at

https://www.cftc.gov/IndustryOversight/ClearingOrganizations/index.htm.

21 On August 18, 2015, the Commission issued an Order of Exemption with respect to ASX, available at

http://www.cftc.gov/ucm/groups/public/@otherif/documents/ifdocs/asxclearfutdcoexemptorder.pdf. On January 28,

2016, the Commission issued an Amended Order of Exemption, available at

http://www.cftc.gov/ucm/groups/public/@otherif/documents/ifdocs/asxclearamdorderdcoexemption.pdf. These

orders exempt ASX from registration with the Commission as a derivatives clearing organization, subject to the

terms and conditions of the most recent order.

22 On October 26, 2015, the Commission issued an Order of Exemption with respect to JSCC, available at

http://www.cftc.gov/idc/groups/public/@otherif/documents/ifdocs/jsccdcoexemptorder10-26-15.pdf. On May 15,

2017, the Commission issued an Amended Order of Exemption, available at

http://www.cftc.gov/idc/groups/public/@otherif/documents/ifdocs/jsccdcoexemptamdorder5-15-17.pdf. On

September 12, 2025, the Commission issued a further amended exemptive order, available at

https://www.cftc.gov/media/12671/JSCC%20AmendedExemptionOrder_09-12-2025/download. These orders

exempt JSCC from registration with the Commission as a derivatives clearing organization, subject to the terms and

conditions of the most recent order

rif/documents/ifdocs/jsccdcoexemptamdorder5-15-17.pdf. On

September 12, 2025, the Commission issued a further amended exemptive order, available at

https://www.cftc.gov/media/12671/JSCC%20AmendedExemptionOrder_09-12-2025/download. These orders

exempt JSCC from registration with the Commission as a derivatives clearing organization, subject to the terms and

conditions of the most recent order.

23 On October 26, 2015, the Commission issued an Order of Exemption with respect to KRX, available at

http://www.cftc.gov/idc/groups/public/@otherif/documents/ifdocs/krxdcoexemptorder10-26-15.pdf. This order

exempts KRX from registration with the Commission as a derivatives clearing organization, subject to the terms and

conditions of the order.

24 On December 21, 2015, the Commission issued an Order of Exemption with respect to OTC Clear, available at

http://www.cftc.gov/idc/groups/public/@otherif/documents/ifdocs/otccleardcoexemptorder12-21-15.pdf. This order

exempts OTC Clear from registration with the Commission as a derivatives clearing organization, subject to the

terms and conditions of the order.

25 On February 14, 2024, subsequent to MPD’s issuance of Letter 23-01, the Commission issued an Order of

Exemption with respect to the Taiwan Futures Exchange Corporation (“TAIFEX”), which exempts TAIFEX from

registering with the Commission as a DCO, subject to certain terms and conditions in the order, available at

https://www.cftc.gov/media/10251/TAIFEX%20Order%20of%20Exemption%20from%20DCO%20Registration%2

002-14-24/download.

o MPD’s issuance of Letter 23-01, the Commission issued an Order of

Exemption with respect to the Taiwan Futures Exchange Corporation (“TAIFEX”), which exempts TAIFEX from

registering with the Commission as a DCO, subject to certain terms and conditions in the order, available at

https://www.cftc.gov/media/10251/TAIFEX%20Order%20of%20Exemption%20from%20DCO%20Registration%2

002-14-24/download.

ITBC Swaps – Eligible UK Trading Venues

7

D.

Letter 23-01

In 2022, the International Swaps and Derivatives Association, Inc. (“ISDA”) requested that staff

expand the scope of the ITBC Swaps covered under the no-action position in Letter 13-70 to

include: (i) all swaps that are of a type accepted for clearing at execution; and (ii) swaps that are

intended to be cleared through an Exempt DCO or that are executed on or pursuant to the rules of

an Exempt SEF.26 In its request, ISDA noted that the cleared swaps market has grown considerably

following the issuance of Letter 13-70, both in the number of swaps cleared as well as in the range

of types of swaps that are cleared through DCOs and Exempt DCOs.27 For example, they noted

that in connection with the discontinuation of the London Interbank Offered Rate, swaps

referencing the Secured Overnight Financing Rate had begun to be cleared.28

ISDA argued that applying the full range of business conduct and documentation requirements to

all ITBC Swaps that are of a type accepted for clearing by a DCO or Exempt DCO at execution is

unnecessary

27 For example, they noted

that in connection with the discontinuation of the London Interbank Offered Rate, swaps

referencing the Secured Overnight Financing Rate had begun to be cleared.28

ISDA argued that applying the full range of business conduct and documentation requirements to

all ITBC Swaps that are of a type accepted for clearing by a DCO or Exempt DCO at execution is

unnecessary. Specifically, according to ISDA, these swaps are sufficiently standardized so as to

obviate the need for material risk, characteristics, incentives, and mid-market mark disclosures, as

well as obligations related to institutional suitability.29 Finally, ISDA argued that once the swap is

immediately cleared through a DCO or Exempt DCO, there is no ongoing relationship between

the counterparties, and imposing the requirements subject to this relief on SDs would not be

meaningful given that the swap at issue is immediately replaced with two DCO – or Exempt DCO

– facing swaps after execution.30

After considering the request and for the reasons provided in Letter 23-01,31 MPD issued Letter

23-01, which superseded Letter 13-70 in its entirety.32 Letter 23-01 provided a revised MPD no-

action position which incorporated, expanded on, and refined the MPD no-action position

presented in Letter 13-70.33 Among these changes and subject to certain conditions as more fully

described in Letter 23-01,34 MPD expanded the scope of the ITBC Swaps covered by its no-action

position to all swaps of a type accepted for clearing by an Eligible DCO on the date of execution;

and swaps that are executed on or pursuant to the rules of an Exempt SEF. In addition, MPD stated

that its position in Letter 23-01 would expire on December 31, 2025.

26 See ISDA Request Letter (May 31, 2022) (included with Letter 23-01, summarizing summary of the market

participants’ arguments for requesting a no-action position), available at https://www.cftc.gov/csl/23-

01/request_letter/download.

27 See ISDA Request Letter at 4

to the rules of an Exempt SEF. In addition, MPD stated

that its position in Letter 23-01 would expire on December 31, 2025.

26 See ISDA Request Letter (May 31, 2022) (included with Letter 23-01, summarizing summary of the market

participants’ arguments for requesting a no-action position), available at https://www.cftc.gov/csl/23-

01/request_letter/download.

27 See ISDA Request Letter at 4.

28 Certain of such SOFR swaps are now required to be cleared. See Clearing Requirement Determination Under

Section 2(h) of the Commodity Exchange Act for Interest Rate Swaps To Account for the Transition From LIBOR

and Other IBORs to Alternative Reference Rates, 87 FR 52182, 52207 (Aug. 24, 2022) (“The Commission is

adopting a clearing requirement for USD SOFR . . . that will be implemented on October 31, 2022 . . .”).

29 ISDA Request Letter at 4.

30 Id.

31 See Letter 23-01 at 7–8.

32 Id. at 1.

33 Id. at 7⁠–10.

34 Id. at 8–10.

ITBC Swaps – Eligible UK Trading Venues

8

E.

EBCS STRD Final Rule and ITBC Swaps

On December 18, 2025, the Commission issued the EBCS STRD Final Rule to amend the External

BCS and STRD Requirement. Among these amendments, the Final Rule codified, with certain

modifications, Letter 23-01 by providing exceptions from the External BCS and STRD

Requirement for certain ITBC Swaps (as defined in the Final Rule). One of the non-exclusive

conditions for the exceptions to the External BCS is that the relevant ITBC Swap be initiated on a

trading facility currently exempted from registration as a swap execution facility by the

Commission pursuant to section 5h(g) of the Act.35 Notably, this does not include an Eligible UK

Trading Venue benefiting from a no-action position, as discussed above

Final Rule). One of the non-exclusive

conditions for the exceptions to the External BCS is that the relevant ITBC Swap be initiated on a

trading facility currently exempted from registration as a swap execution facility by the

Commission pursuant to section 5h(g) of the Act.35 Notably, this does not include an Eligible UK

Trading Venue benefiting from a no-action position, as discussed above. Similarly, the definition

of ITBC Swap has different requirements depending on whether the swap is executed on or

pursuant to the rules of a DCM, SEF, or a trading facility currently exempted from registration as

a swap execution facility by the Commission pursuant to Section 5h(g) of the Act.

II.

MPD No-Action Position on Eligible UK Trading Venues

MPD is issuing this letter to provide market participants certainty with respect to its treatment of

ITBC Swaps initiated on an Eligible UK Trading Venue. MPD will not recommend that the

Commission commence an enforcement action against an SD or MSP solely as a result of it treating

an Eligible UK Trading Venue as a trading facility currently exempted from registration as a swap

execution facility by the Commission pursuant to Section 5h(g) of the Act for purposes of the

definition of an ITBC Swap under Commission regulation 23.401(d)36 and the Subject EBCS in

relation to ITBC Swaps.

This letter, and the position taken herein, represent the views of MPD only, and do not necessarily

represent the position or view of the Commission or of any other office or division of the

Commission. This letter and the no-action position taken herein are not binding on the

Commission.37 Further, this letter, and the position taken herein, are based upon the facts and

circumstances presented to MPD staff. Any different, changed or omitted material facts or

circumstances might render the position taken in this letter void

e Commission or of any other office or division of the

Commission. This letter and the no-action position taken herein are not binding on the

Commission.37 Further, this letter, and the position taken herein, are based upon the facts and

circumstances presented to MPD staff. Any different, changed or omitted material facts or

circumstances might render the position taken in this letter void. Finally, as with all staff letters,

MPD retains the authority to condition further, modify, suspend, terminate, or otherwise restrict

the terms of the position taken herein, in its discretion.

Questions concerning the relief provided by MPD in this letter may be directed to Frank Fisanich,

Deputy Director, at (202) 418-5949 or ffisanich@cftc.gov; Jacob Chachkin, Associate Director, at

35 See 17 CFR 23.430, 431, 432, 434, 440, and 23.450 (collectively, the “Subject EBCS”). For example, the

exception for ITBC Swaps in 17 CFR 23.430(e)(4) applies to “[a]n ITBC Swap initiated on a swap execution

facility, or a trading facility currently exempted from registration as a swap execution facility by the Commission

pursuant to section 5h(g) of the Act.”

36 17 CFR 23.401(d).

37 See Commission regulation 140.99(a)(2), 17 CFR 140.99(a)(2) (“A no-action letter binds only the issuing

Division . . . and not the Commission or other Commission staff.”).

ITBC Swaps – Eligible UK Trading Venues

9

202-418-5496 or jchachkin@cftc.gov; or Danielle Abada, Senior Special Counsel, at 646-746-

3931 or dabada@cftc.gov.

Sincerely,

_______________________

Thomas J. Smith

Acting Director

Market Participants Division

cc:

Kathleen Clapper, Compliance

National Futures Association, Chicago

Michael Otten, OTC Derivatives

National Futures Association, New York