Clearing Exemption for Swaps Between Certain Affiliated Entities

The Commodity Futures Trading Commission (``CFTC'' or ``Commission'') is proposing a rule to exempt swaps between certain affiliated entities within a corporate group from the clearing requirement (the ``inter-affiliate clearing exemption'' or the ``proposed exemption'') under Section 2(h)(1)(A) of the Commodity Exchange Act (``CEA''). The Commission also is proposing rules that detail specific conditions counterparties must satisfy to elect the proposed inter-affiliate clearing exemption, as well as reporting requirements for affiliated entities that avail themselves of the proposed exemption. The Commission has finalized a rule that addresses swaps that are subject to the end-user exception. Counterparties to inter-affiliate swaps that qualify for the end-user exception would be able to elect to not clear swaps pursuant to the end-user exception or the proposed rule. The proposed rule does not address swaps that an affiliate enters into with a third party that are related to inter- affiliate swaps that are subject to the end-user exception. The Commission intends separately to propose a rule addressing swaps between an affiliate and a third party where the swaps are used to hedge or mitigate commercial risk arising from inter-affiliate swaps for which the end-user exception has been elected.

Agency Contact: Gloria Clement, Assistant General Counsel, (202) 418-5122, gclement@cftc.gov, Office of General Counsel; Jonathan Lave, Associate Director, Exchange & Data Repository, (202) 418-5983, jlave@cftc.gov, and Alexis Hall-Bugg, Attorney-Advisor, (202) 418-6711, ahallbugg@cftc.gov, Division of Market Oversight; Warren Gorlick, Supervisory Attorney-Advisor, (202) 418-5195, wgorlick@cftc.gov, and Anuradha Banerjee, Attorney-Advisor, (202) 418- 5661, abanerjee@cftc.gov, Office of International Affairs; Theodore Kneller, Attorney-Advisor, (202) 418-5727, tkneller@cftc.gov, Division of Enforcement; Elizabeth Miller, Attorney-Advisor, (202) 418-5985, emiller@cftc.gov, Division of Swap Dealer and Intermediary Oversight; Esen Onur, Research Economist, (202) 418-6146, eonur@cftc.gov, Office of the Chief Economist; and Jolanta Sterbenz, Counsel, (202) 418-6639, jsterbenz@cftc.gov, Office of General Counsel, Commodity Futures Trading Commission, Three Lafayette Centre, 1155 21st Street, NW., Washington, DC 20581.