The Commodity Futures Trading Commission (CFTC) late in the day on Friday issued several letters extending the deadlines for market participants to determine if certain commodities fall under the agency’s definition of either a “swap,” “swap dealer” or “major swap participant.”
The extensions will affect certain agricultural and exempt commodities, foreign exchange forwards, foreign exchange swaps and certain other foreign entities, and will allow for additional time to determine whether these entities meet the definition of a swap dealer or major swap participant under the Commodity Exchange Act (CEA).
In the case of agricultural and exempt commodities, the CFTC’s Division of Swap Dealer and Intermediary Oversight (DSIO) will not recommend that the agency take enforcement action against anyone who fails to include these swaps in a calculation of the aggregate gross notional amount of swaps until Oct. 20. In a statement, the agency said that the extension will help to “ensure that market practices will not be unduly disrupted during the transition to the new regulatory regime.”
The commission also expressed concern that foreign entities “may adopt either potentially over-inclusive or potentially under-inclusive categorizations of their counterparties,” noting that “either result would not be consistent with the [CFTC’s] intent…to establish a uniform and consistent standard, through a definition of ‘U.S. person.’” Accordingly, the DSIO will not recommend enforcement action against these entities until Dec. 31 or the effective date of the definition of “U.S. person” in a final exemptive order, whichever occurs earlier.