CFTC Approves Both Interim Final Rule and a Proposed Rule and Extends No-Action Relief in Response to Covid-19

On May 28, 2020, the Commodity Futures Trading Commission (CFTC) unanimously approved an interim final rule in order to grant an extension of the compliance schedule for uncleared swaps in response to the many operational challenges entities are facing in the wake of the COVID-19 (coronavirus) pandemic. It also approved a proposed rule exempting certain foreign persons from registration as a commodity pool operator (CPO). Recently, the CFTC extended previous waves of no-action relief in response to the coronavirus.

The CFTC first approved an interim final rule which would defer the compliance date for initial margin requirements under the CFTC Margin Rule by one year from September 1, 2020 to September 1, 2021. This was intended to provide additional time in light of the impact of the coronavirus and is consistent with the Basel Committee on Banking Supervision and the International Organization of Securities Commissions’ recent changes to the implementation schedule for margin requirements for non-centrally-cleared derivatives.

Second, the CFTC unanimously approved a proposed rule amending Regulation 3.10(c)(3), which exempts certain foreign persons from registration as a CPO who are operating offshore commodity pools that are neither offered nor sold to U.S. participants. And the proposal includes several other measures pertaining to CPO requirements.

Finally, the CFTC also recently extended no-action relief related to COVID-19 that was set to expire on June 30, 2020 until September 30, 2020. This included prior relief from the CFTC for Designated Contracts Markets and Swap Execution Facilities, Futures Commission Merchants and Introducing Brokers, Floor Brokers, Retail Foreign Exchange Dealers, Swap Dealers, Swap Execution Facilities, and Designated Contract Markets. Covington covered the prior waves of no-action relief here, here, and here.

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