MFA Blog

MFA and AIMA Submit Letter to CFTC on Cross-Border Exemptive Order

Posted on August 21, 2013

MFA and AIMA submitted a letter to the Commodity Futures Trading Commission (CFTC) in response to its “Exemptive Order Regarding Compliance With Certain Swap Regulations” (Exemptive Order).   In the letter, MFA and AIMA explained how the intersection and sequencing of the CFTC’s final cross-border interpretive guidance, Exemptive Order and final reporting rules creates problems for funds because, for certain swaps with non-U.S. dealers, it would unintentionally cause funds, rather than dealers, to be responsible for reporting those swaps entered.  Therefore, in general terms, MFA and AIMA requested that where: (1) a fund’s non-U.S. dealer counterparty will register as a swap dealer (SD) on December 31, 2013,  the CFTC not deem the fund to be the “reporting party” for the period prior to when such dealer registers as an SD, and thereby, becomes the “reporting party” with respect those swaps; (2) a fund’s non-U.S. dealer counterparty is not a registered SD, but such dealer has an affiliate that is currently a registered SD, the CFTC deem the registered SD affiliate to be the “reporting party” for the swaps between the non-U.S dealer and the fund; and (3) a fund’s non-U.S dealer counterparty will not register as an SD on December 31, 2013 and is not an affiliate of a registered SD, the CFTC not deem the fund to be the “reporting party” until January 31, 2014, to provide the fund sufficient time to be able to comply with its “reporting party” obligations with respect to swaps with the non-U.S. dealer.  Lastly, MFA and AIMA urged the CFTC to confirm that, for a non-U.S. fund that becomes a “U.S. person” at some point after October 10, 2013, the non-U.S. Fund and its affected non-U.S. counterparties will have a 75-day phase-in period from the date the non-U.S. Fund’s status changes to comply with the applicable Dodd-Frank requirements.