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43785Federal Register / Vol. 78, No. 140/ Monday, July 22, 2013 / Rules and Regulations

1See 17 CFR 145.9.25 U.S.C. 551, et seq.35 U.S.C. 552.4See Dodd-Frank Wall Street Reform and

Consumer Protection Act, Public Law 111203, 124Stat. 1376 (July 21, 2010).

57 U.S.C. 1 et seq. (amended 2010).

67 U.S.C. 2(i).77 U.S.C. 6s.8Examples of section 4s implementing rules that

become effective for SDs and MSPs at the time oftheir registration include requirements relating toswap data reporting (Commission regulation23.204) and conflicts of interest (Commissionregulation 23.605(c)(d)). The chief complianceofficer requirement (Commission regulations 3.1and 3.3) is an example of those rules that havespecific compliance dates. The compliance datesare summarized on the Compliance Dates page ofthe Commissions Web site. (http://www.cftc.gov/LawRegulation/DoddFrankAct/ComplianceDates/index.htm). The Commissions regulations arecodified at 17 CFR Ch. 1.

9These include rules under CEA section 4s(e),7U.S.C. 6s(e) (governing capital and marginrequirements for SDs and MSPs), and CEA section4s(l), 7 U.S.C. 6s(l) (governing segregationrequirements for uncleared swaps).

10Cross-Border Application of Certain SwapsProvisions of the Commodity Exchange Act, 77 FR41214 (Jul. 12, 2012) (Proposed Guidance).

117 U.S.C. 1a(49) (defining the term swapdealer).

COMMODITY FUTURES TRADINGCOMMISSION

17 CFR Chapter I

RIN 3038AE05

Exemptive Order RegardingCompliance With Certain SwapRegulations

AGENCY: Commodity Futures TradingCommission.

ACTION: Exemptive order; request forcomments.

SUMMARY: On January 7, 2013, theCommodity Futures TradingCommission (Commission orCFTC) issued a final order (JanuaryOrder) that granted market participantstemporary conditional relief fromcertain provisions of the CommodityExchange Act (CEA), as amended byTitle VII of the Dodd-Frank Wall Street

Reform and Consumer Protection Act(Dodd-Frank Act or Dodd-Frank)(and Commission regulationsthereunder). The January Order expireson July 12, 2013. In this ExemptiveOrder (Exemptive Order), theCommission provides temporaryconditional relief effective upon theexpiration of the January Order in orderto facilitate transition to the Dodd-Frankswaps regime.

DATES: The Exemptive Order is effectiveJuly 13, 2013, and will expire December21, 2013, or such earlier date specifiedin the Exemptive Order.

ADDRESSES

: You may submit comments,identified by RIN number 3038AE05,by any of the following methods:

The agencys Web site:at http://comments.cftc.gov.Follow theinstructions for submitting commentsthrough the Web site.

Mail:Melissa D. Jurgens, Secretaryof the Commission, Commodity FuturesTrading Commission, Three LafayetteCentre, 1155 21st Street NW.,Washington, DC 20581.

Hand Delivery/Courier:Same asmail above.

Federal eRulemaking Portal:http://www.regulations.gov.Follow theinstructions for submitting comments.Please submit your comments usingonly one method.

All comments must be submitted inEnglish, or if not, accompanied by anEnglish translation. Comments will beposted as received to www.cftc.gov.Youshould submit only information thatyou wish to make available publicly. Ifyou wish the Commission to considerinformation that you believe is exemptfrom disclosure under the Freedom ofInformation Act, a petition for

confidential treatment of the exemptinformation may be submitted accordingto the procedures established in 145.9of the Commissions regulations.1

The Commission reserves the right,but shall have no obligation, to review,pre-screen, filter, redact, refuse orremove any or all of your submissionfrom www.cftc.govthat it may deem to

be inappropriate for publication, such asobscene language. All submissions thathave been redacted or removed thatcontain comments on the merits of theproposal will be retained in the publiccomment file and will be considered asrequired under the AdministrativeProcedure Act 2 and other applicablelaws, and may be accessible under theFreedom of Information Act.3FOR FURTHER INFORMATION CONTACT: GaryBarnett, Director, Division of SwapDealer and Intermediary Oversight,(202) 4185977, [email protected];Sarah E. Josephson, Director, Office of

International Affairs, (202) 4185684,[email protected];Mark Fajfar,Assistant General Counsel, Office ofGeneral Counsel, (202) 4186636,[email protected];Laura B. Badian,Counsel, Office of General Counsel,(202) 4185969, [email protected];EvanH. Winerman, Attorney-Advisor, Officeof General Counsel, (202) 4185674,[email protected];CommodityFutures Trading Commission, ThreeLafayette Centre, 1155 21st Street NW.,Washington, DC 20581.SUPPLEMENTARY INFORMATION:

I. Background

On July 21, 2010, President Obamasigned the Dodd-Frank Act,4 whichamended the CEA 5 to establish a newregulatory framework for swaps. Thelegislation was enacted to reducesystemic risk, increase transparency,and promote market integrity within thefinancial system by, among other things:(1) Providing for the registration andcomprehensive regulation of swapdealers (SDs) and major swapparticipants (MSPs); (2) imposingclearing and trade executionrequirements on standardized derivativeproducts; (3) creating rigorousrecordkeeping and data reportingregimes with respect to swaps,including real-time public reporting;and (4) enhancing the Commissionsrulemaking and enforcement authoritiesover all registered entities,

intermediaries, and swap counterpartiessubject to the Commissions oversight.Section 722(d) of the Dodd-Frank Actalso amended the CEA to add section2(i), which provides that the swapsprovisions of the CEA apply to cross-

border activities when certainconditions are met, namely, when suchactivities have a direct and significant

connection with activities in, or effecton, commerce of the United States orwhen they contravene a Commissionrulemaking.6

In the nearly three years since itsenactment, the Commission hasfinalized 69 actions to implement TitleVII of the Dodd-Frank Act. The finalizedactions include rules promulgatedunder CEA section 4s,7 which addressregistration of SDs and MSPs and othersubstantive requirements applicable toSDs and MSPs. Notably, many section4s requirements applicable to SDs andMSPs are tied to the date on which a

person is required to register, unless alater compliance date is specified.8 Anumber of other rules specificallyapplicable to SDs and MSPs have beenproposed but are not finalized.9

Further, the Commission publishedfor public comment the ProposedGuidance,10 which set forth the mannerin which it proposed to interpret section2(i) of the CEA as it applies to therequirements under the Dodd-Frank Actand the Commissions regulationspromulgated thereunder regardingcross-border swaps activities.Specifically, in the Proposed Guidance,the Commission described the generalmanner in which it proposed toconsider: (1) Whether a non-U.S.persons swap dealing activities aresufficient to require registration as aswap dealer, 11 as further defined in ajoint release adopted by the Commission

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http://www.cftc.gov/LawRegulation/DoddFrankAct/ComplianceDates/index.htmhttp://www.cftc.gov/LawRegulation/DoddFrankAct/ComplianceDates/index.htmhttp://www.cftc.gov/LawRegulation/DoddFrankAct/ComplianceDates/index.htmhttp://www.cftc.gov/LawRegulation/DoddFrankAct/ComplianceDates/index.htmhttp://comments.cftc.gov/http://comments.cftc.gov/http://www.regulations.gov/http://www.regulations.gov/http://www.cftc.gov/http://www.cftc.gov/mailto:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]://www.cftc.gov/http://www.cftc.gov/mailto:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]://comments.cftc.gov/http://comments.cftc.gov/http://www.regulations.gov/http://www.regulations.gov/http://www.cftc.gov/LawRegulation/DoddFrankAct/ComplianceDates/index.htmhttp://www.cftc.gov/LawRegulation/DoddFrankAct/ComplianceDates/index.htmhttp://www.cftc.gov/LawRegulation/DoddFrankAct/ComplianceDates/index.htm

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43786 Federal Register / Vol. 78, No. 140/ Monday, July 22, 2013 / Rules and Regulations

12See Further Definition of Swap Dealer,Security-Based Swap Dealer, Major SwapParticipant, Major Security-Based SwapParticipant and Eligible Contract Participant, 77FR 305969 (May 23, 2012) (Final Entities Rules).

137 U.S.C. 1a(33) (defining the term major swapparticipant).

1477 FR 41110 (Jul. 12, 2012).1578 FR 858 (Jan. 7, 2013).16CFTC Division of Swap Dealer and

Intermediary Oversight, Re: Time-Limited No-Action Relief: Swaps Only With Certain Persons tobe Included in Calculation of Aggregate Gross

Notional Amount for Purposes of Swap Dealer DeMinimis Exception and Calculation of Whether aPerson is a Major Swap Participant, No-ActionLetter No. 1222 (Oct. 12, 2012).

17See Interpretive Guidance and PolicyStatement Regarding Compliance with CertainSwap Regulations, (Guidance), adoptedconcurrently with the Exemptive Order.

18As stated in the Guidance, any comparabilityanalysis will be based on a comparison of specificforeign requirements against specific related CEAprovisions and Commission regulations in 13categories of regulatory obligations, consideringcertain factors described in the Guidance.

19The Commission notes that of 78 SDs and twoMSPs registered as of June 14, 2013, 33 SDs arefrom six non-U.S. jurisdictions: Twenty from theEuropean Union; five from Australia; five fromCanada; one from Japan; one from Hong Kong; andone from Switzerland.

20See 5 U.S.C. 553(b)(B).

and the Securities and ExchangeCommission (SEC) (collectively, theCommissions);12 (2) whether a non-U.S. persons swap positions aresufficient to require registration as amajor swap participant, 13 as furtherdefined in the Final Entities Rules; and(3) the treatment of foreign branches,agencies, affiliates, and subsidiaries of

U.S. SDs and U.S. branches of non-U.S.SDs. The Proposed Guidance alsogenerally described the policy basis andprocedural framework underlying theCommissions determination to allowcompliance with a comparableregulatory requirement of a foreignjurisdiction to substitute for compliancewith the requirements of the CEA andCommission regulations thereunder.Last, the Proposed Guidance set forththe manner in which the Commissionproposed to interpret section 2(i) of theCEA as it applies to the clearing,trading, and certain reporting

requirements under the Dodd-Frank Actwith respect to swaps betweencounterparties that are not SDs or MSPs.

Contemporaneously with theProposed Guidance, the Commissionpublished the Exemptive OrderRegarding Compliance With CertainSwap Regulations (Proposed Order) 14pursuant to section 4(c) of the CEA, inorder to foster an orderly transition tothe new swaps regulatory regime and toprovide market participants greatercertainty regarding their obligationswith respect to cross-border swapsactivities prior to finalization of theProposed Order. The Proposed Order

would have granted temporary relieffrom certain swaps provisions of TitleVII of the Dodd-Frank Act.

On January 7, 2013, the Commissionpublished the Final Exemptive OrderRegarding Compliance with CertainSwap Regulations (January Order),15which finalized the Proposed Order,with modifications, and grantedtemporary relief from certain swapsprovisions of Title VII of the Dodd-Frank Act. In particular, the JanuaryOrder: (1) Applies, for purposes of the

January Order, a definition of the termU.S. person based on the counterparty

criteria set forth in CFTC Letter No. 1222,16 with certain modifications; (2)

provides relief concerning SD deminimis and MSP thresholdcalculations; (3) classifies, for purposesof the January Order, requirements ofthe CEA and Commission regulations aseither Entity-Level Requirements orTransaction-Level Requirements; (4)allows non-U.S. persons that register asSDs or MSPs to delay compliance with

certain Entity-Level Requirements andTransaction-Level Requirements; and (5)allows foreign branches of U.S. SDs orMSPs to delay compliance with certainTransaction-Level Requirements. The

January Order was effective December21, 2012, and expires July 12, 2013.

II. Need for Further Exemptive ReliefWith Request for Comments

In issuing the January Order, theCommission attempted to be responsiveto industrys concerns regardingimplementation and thereby ensure thatmarket practices would not be

unnecessarily disrupted during thetransition to the new swaps regulatoryregime. At the same time, however, theCommission endeavored to comply withthe Congressional mandate toimplement the new SD and MSPregulatory scheme in a timely manner.Accordingly, the January Order wascarefully tailored both in scope andduration in order to strike the proper

balance between these competingdemands.

Following the issuance of the JanuaryOrder, Commission staff addressedvarious implementation issues throughno-action letters and interpretativeletters in order to ensure a smoothtransition to the new swaps regulatoryregime. Furthermore, the Commissionand its staff have closely consulted withSEC staff and with foreign regulators inan effort to harmonize cross-borderregulatory approaches. As a result,significant progress has been madetowards implementation of the Dodd-Frank swaps regime. Under thesecircumstances, the Commission doesnot believe that an extension of the

January Order is necessary orappropriate. The Commission believes,however, that further transitional relief

is necessary in order to avoidunnecessary market disruptions and tofacilitate market participants transitionto the new Dodd-Frank swaps regime.Specifically, with the expiration of the

January Order, the temporary definitionof the term U.S. person will no longer

be available. As a result, marketparticipants will need additional time to

adjust their operational and compliancesystems in order to incorporate therevised scope of the term U.S. person.

The Commission also recognizes thatimplementation of the Commissionssubstituted compliance program would

benefit from additional time.17 Underthis substituted compliance program,the Commission may determine that

certain laws and regulations of a foreignjurisdiction are comparable to, and ascomprehensive as, a correspondingcategory of U.S. laws and regulations.18A finding of comparability, however,may not be possible at this time for anumber of reasons, including that theforeign jurisdiction has not yetimplemented or finalized particularrequirements and that the Commissiondoes not have sufficient information tomake the comparability determinations(Substituted ComplianceDeterminations). Moreover, theCommission has only recently received

requests for Substituted ComplianceDeterminations from parties located inAustralia, Canada, the European Union,Hong Kong, Japan, and Switzerland.19

The Commission is issuing theExemptive Order today, with a requestfor comments, as it is cognizant that, inthe absence of immediate exemptiverelief, market participants will be facedwith significant legal uncertainty andthe risk of adverse consequences to theirglobal business, especially in light of theongoing discussions with foreignregulatory entities and their evolvingregulatory regimes. For all of theforegoing reasons, the Commission finds

that public notice and comment on thisExemptive Order would beimpracticable, unnecessary, andcontrary to the public interest.20

Because the Commission understandsthat the transition to the Guidance iscomplex and could apply in variedways to different situations, theCommission is seeking public commenton any issues that are not fullyaddressed by the Exemptive Order.Thus, the Exemptive Order is effectiveas of July 13, 2013, and the Commissionis soliciting comments for 30 days. The


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217 U.S.C. 1a(49) and 1a(33). See Final EntitiesRules.

22Section 1a(49)(D) of the CEA, 7 U.S.C.1a(49)(D), provides that [t]he Commission shallexempt from designation as a swap dealer an entitythat engages in a de minimis quantity of swapdealing in connection with transactions with or onbehalf of its customers. The Commission shall

promulgate regulations to establish factors withrespect to the making of this determination toexempt. This provision is implemented inCommission regulation 1.3(ggg)(4).

23As used in the Exemptive Order, the meaningof the term swap dealing is consistent with that

used in the Final Entities Rules.24Under Commission regulations 3.10(a)(1)(v)(C)

and 23.21, a person is required to register as an SDwhen, on or after October 12, 2012, the person fallswithin the definition of an SD. However, the ruledefining swap dealer includes a de minimisthreshold so that an entity is not an SD if it, togetherwith the entities controlling, controlled by, andunder common control with it, engages in swapdealing activity during the prior 12 months in anaggregate gross notional amount of less than thespecified thresholds. The rule further specifies thatswap dealing activity engaged in before the effectivedate of both the swap dealer and swapdefinition rules (i.e.,before October 12, 2012) doesnot count toward the de minimis threshold. Therule also provides that an entity that exceeds the deminimis threshold must register as an SD twomonths after the end of the month in which it

exceeds the threshold. See Commission regulation1.3(ggg)(4).25On the other hand, the Commission believes

that it is not appropriate to provide a non-U.S.person with relief from the registration requirementwhen the aggregate level of its swap dealing withU.S. persons, as that term is defined in theGuidance, exceeds the de minimis level of swapdealing, or when the level of its swap positionswith U.S. persons, again as that term is definedabove, exceeds one of the MSP thresholds. In theCommissions view, such relief from the registrationrequirement is inappropriate when a level of swapsactivities that is substantial enough to requireregistration as an SD or an MSP when conductedby a U.S. person, is conducted by a non-U.S. personwith U.S. persons as counterparties.

26For this purpose, the Commission construesaffiliates to include persons under commoncontrol as stated in the Commissions final rulefurther defining the term swap dealer, whichdefines control as the possession, direct orindirect, of the power to direct or cause thedirection of the management and policies of aperson, whether through the ownership of votingsecurities, by contract or otherwise. See FinalEntities Rules, 77 FR at 30631 n. 437.

Commission will take into considerationarguments made in all commentsreceived and make adjustments to theExemptive Order, as necessary.

In summary, like the January Order,the Exemptive Order will providetargeted, time-limited relief from certainDodd-Frank requirements to facilitate anorderly transition to the Dodd-Frank

regulatory regime, while, at the sametime, ensuring that the Dodd-Frankswaps market reform is implementedwithout undue delay.

III. Scope of Exemptive Order

A. Definition of U.S. Person andPhase-In of Guaranteed Affiliates andAffiliate Conduits

As discussed above, the Commissionrecognizes that market participants mayneed additional time to facilitate theirtransition to the interpretation of theterm U.S. person. Accordingly, underthe Exemptive Order, the definition of

the term U.S. person contained in theJanuary Order will continue to applyfrom July 13, 2013 (the date on whichthe Exemptive Order is effective) until75 days after the Final Guidance ispublished in the Federal Register. TheCommission expects that this step, andthe other relief provided in thisExemptive Order, will substantiallyaddress concerns regarding thecomplexity of implementing the swaprequirements for the interim periodduring which the Exemptive Order is ineffect. In addition, guaranteed affiliatesand affiliate conduits do not need tocomply with Transaction-LevelRequirements relating to swaps withnon-U.S. persons and foreign branchesof U.S. swap dealers and MSPs until 75days after the Final Guidance ispublished in the Federal Register.

B. De Minimis Calculation

The Commission has adopted finalrules and interpretive guidanceimplementing the statutory definitionsof the terms swap dealer and majorswap participant in CEA sections1a(49) and 1a(33).21 The Final EntitiesRules delineate the activities that causea person to be an SD and the level of

swap positions that cause a person to bean MSP. In addition, the Commissionhas adopted rules concerning thestatutory exceptions from the definitionof an SD, including the de minimisexception.22 Commission regulation

1.3(ggg)(4) sets forth a de minimisthreshold of swap dealing, which takesinto account the notional amount of apersons swap dealing activity over theprior 12 months.23 When a personengages in swap dealing transactionsabove that threshold, the person meetsthe SD definition in section 1a(49) of theCEA.24 Commission regulations

1.3(jjj)(1) and 1.3(lll)(1) set forth swapposition thresholds for the MSPdefinition in Commission regulation1.3(hhh). When a person holds swappositions above those thresholds, suchperson meets the MSP definition insection 1a(39) of the CEA.

As described in the January Order, theCommission believed it appropriate toprovide, during the pendency of theCommissions cross-border interpretiveguidance, temporary relief for non-U.S.persons (regardless of whether the non-U.S. persons swap obligations areguaranteed by U.S. persons) from the

requirement that a person include all itsswaps in its calculation of the aggregategross notional amount of swapsconnected with its swap dealing activityfor SD purposes or in its calculations forMSP purposes.25 In order to facilitate anorderly transition to the revised scope ofthe term U.S. person, the ExemptiveOrder provides that until 75 days afterthe Guidance is published in the

Federal Register, a non-U.S. person(regardless of whether the non-U.S.persons swaps obligations areguaranteed by U.S. persons) does notneed to include in its calculation of theaggregate gross notional amount ofswaps connected with its swap dealingactivity for purposes of Commissionregulation 1.3(ggg)(4) or in its

calculation of whether it is an MSP forpurposes of Commission regulation1.3(hhh), any swaps where thecounterparty is a non-U.S. person, orany swap where the counterparty is aforeign branch of a U.S. person that isregistered as a swap dealer.

C. Aggregation

Commission regulation 1.3(ggg)(4)requires that a person include, indetermining whether its swap dealingactivities exceed the de minimisthreshold, the aggregate notional valueof swap dealing transactions entered byits affiliates under common control.Under the January Order, a non-U.S.person that is engaged in swap dealingactivities with U.S. persons as of theeffective date of the January Order is notrequired to include, in its calculation ofthe aggregate gross notional amount ofswaps connected with its swap dealingactivity for purposes of Commissionregulation 1.3(ggg)(4), the aggregategross notional amount of swapsconnected with the swap dealingactivity of its U.S. affiliates undercommon control.26 Further, a non-U.S.person that is engaged in swap dealingactivities with U.S. persons as of the

effective date of the January Order andis an affiliate under common controlwith a person that is registered as an SDis also not required to include, in itscalculation of the aggregate grossnotional amount of swaps connectedwith its swap dealing activity forpurposes of Commission regulation1.3(ggg)(4), the aggregate gross notionalamount of swaps connected with theswap dealing activity of any non-U.S.affiliate under common control that iseither (i) engaged in swap dealingactivities with U.S. persons as of theeffective date of the January Order or (ii)

registered as an SD. Also, under theJanuary Order, a non-U.S. person is notrequired to include, in its calculation ofthe aggregate gross notional amount ofswaps connected with its swap dealing


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27Because, as described in the Guidance,substituted compliance is not possible with respectto Large Trader Reporting (LTR) requirements(i.e., non-U.S. persons that are subject to part 20 ofthe Commissions regulations would comply with itin the same way that U.S. persons comply), LTRrequirements are not included within the termEntity-Level Requirements for purposes of theExemptive Order.

2817 CFR 3.3.2917 CFR 23.600, 23.601, 23.602, 23.603, 23.605,

23.606, 23.608, and 23.609.3017 CFR 1.31, 23.201 and 23.203.3117 CFR parts 45 and 46.3217 CFR 23.506, 23.610, and part 50.

33The Commission has adopted regulations fordetermining when a swap is available to tradeand a compliance schedule for the trade executionrequirement that applies when a swap subject tomandatory clearing is available to trade. At thepresent time, no swap either has been determinedto be made available to trade or is subject to thetrade execution requirement. See Process for aDesignated Contract Market or Swap ExecutionFacility To Make a Swap Available to Trade, SwapTransaction Compliance and ImplementationSchedule, and Trade Execution Requirement Underthe Commodity Exchange Act, 78 FR 33606 (Jun. 4,2013). See CEA section 2(h)(8) and 17 CFR 37.12or 38.11.

3417 CFR 23.504 and 23.505.3517 CFR 23.502 and 23.503.3617 CFR 23.205 and part 43.3717 CFR 23.501.3817 CFR 23.202.3917 CFR 23.400 to 23.451.40As detailed in the Guidance, non-U.S. SDs and

MSPs may generally rely on substituted compliancewith respect to capital adequacy, chief complianceofficer, risk management, and certain swap datarecordkeeping. Non-U.S persons may also generallyrely on substituted compliance with respect to SDRreporting and certain aspects of swap datarecordkeeping relating to complaints and marketingand sales materials, but only for transactions withnon-U.S. counterparties.

41The Commission anticipates that non-U.S. SDs/MSPs may require additional time after aSubstituted Compliance Determination in order tophase in compliance with the relevant requirementsof the jurisdiction in which the non-U.S. SDs orMSP is established. The Commission and its staffintend to address the need for any furthertransitional relief in connection with the subjectSubstituted Compliance Determination.

In addition, if an SD or MSP established inanother jurisdiction files a request for registrationbefore December 21, 2013, the Commission mayconsider a request for deferring compliance withthe Entity-Level Requirements if a substitutedcompliance request is filed concurrently with theapplication.

activity for purposes of Commissionregulation 1.3(ggg)(4), the aggregategross notional amount of swapsconnected with the swap dealingactivity of its non-U.S. affiliates undercommon control with other non-U.S.persons as counterparties.

In order to facilitate transition to theexpanded scope of the term U.S.

person, the Exemptive Order allows allnon-U.S. persons to apply theaggregation principle applied in the

January Order until 75 days after theGuidance is published in the FederalRegister.

D. Swap Dealer Registration

A non-U.S. person that waspreviously exempt from registration asan SD because of the temporary reliefextended to such person under theCommissions January Order, but that isrequired to register as an SD underCommission regulation 1.3(ggg)(4)

because of changes to the scope of theterm U.S. person or changes in the deminimis SD calculation or aggregationfor purposes of the de minimiscalculation, is not required to register asan SD until two months after the end ofthe month in which such personexceeds the de minimis threshold for SDregistration.

E. Entity-Level and Transaction-LevelRequirements

1. Categorization

For purposes of the Exemptive Order,the Dodd-Frank swaps provisions

applicable to SDs and MSPs arecategorized as Entity-Level orTransaction-Level Requirements in thesame way as they are categorized in theGuidance.27 In particular, for purposesof the Exemptive Order, Entity-LevelRequirements consist of: (1) Capitaladequacy; (2) chief complianceofficer; 28 (3) risk management; 29 (4)swap data recordkeeping; 30 and (5)swap data repository (SDR)Reporting.31 The Transaction-LevelRequirements consist of: (1) Clearingand swap processing; 32 (2) margin andsegregation requirements for uncleared

swaps; (3) trade execution; 33 (4) swaptrading relationship documentation; 34(5) portfolio reconciliation andcompression; 35 (6) real-time publicreporting; 36 (7) trade confirmation; 37 (8)daily trading records; 38 and (9) external

business conduct standards.39 Underthe Guidance, Transaction-LevelRequirements (1) to (8) are the

Category A Transaction-LevelRequirements, while external businessconduct standards are the Category BTransaction-Level Requirements.

The Commission notes that it has notyet finalized regulations regardingcapital adequacy or margin andsegregation for uncleared swaps. In theevent that the Commission finalizesregulations regarding capital adequacyor margin and segregation for unclearedswaps before December 21, 2013, non-U.S. SDs and non-U.S. MSPs wouldcomply with such requirements inaccordance with any compliance date

provided in the relevant rulemaking.2. Application of Entity-LevelRequirements

i. Application to non-U.S. SDs and non-U.S. MSPs

As described in the Guidance, non-U.S. SDs and non-U.S. MSPs cangenerally comply with specified Entity-Level Requirements by complying withregulations of the jurisdiction in whichthe non-U.S. SD or non-U.S. MSP isestablished, assuming the Commissionhas made a Substituted ComplianceDetermination with respect to theparticular regulatory regime.40 Inaddition to SDs in the United States,there are provisionally registered SDs

that are established in Australia,Canada, the European Union, HongKong, Japan, and Switzerland. Marketparticipants or regulators in all of thesejurisdictions have recently submittedrequests for Substituted ComplianceDeterminations. Given that theGuidance is being issued now, and thatthe Commission did not receive any

submissions in support of SubstitutedCompliance Determinations withsufficient time to review them and reacha final determination, the Commissionhas determined to temporarily delaycompliance with Entity-LevelRequirements in these jurisdictions.Accordingly, under the ExemptiveOrder, a non-U.S. SD or non-U.S. MSPestablished in Australia, Canada, theEuropean Union, Hong Kong, Japan orSwitzerland may defer compliance withany Entity-Level Requirement for whichsubstituted compliance would bepossible, as described in the

Commissions Guidance, until theearlier of December 21, 2013 or 30 daysfollowing the issuance of a SubstitutedCompliance Determination for therelevant regulatory requirements of thejurisdiction in which the non-U.S. SD ornon-U.S. MSP is established.41

Under the January Order, non-U.S.SDs and non-U.S. MSPs are required tocomply with SDR Reporting for allswaps with U.S. counterparties.However, non-U.S. SDs and non-U.S.MSPs that are not part of an affiliatedgroup in which the ultimate parententity is a U.S. SD, U.S. MSP, U.S. bank,U.S. financial holding company or U.S.

bank holding company are relieved,during the pendency of the JanuaryOrder, from complying with the SDRReporting requirements for swaps withnon-U.S. counterparties. In order tofacilitate the transition to fullycompliant SDR Reporting, theCommission will provide non-U.S. SDsand non-U.S. MSPs established inAustralia, Canada, the European Union,Hong Kong, Japan or Switzerland thatare not part of an affiliated group inwhich the ultimate parent entity is aU.S. SD, U.S. MSP, U.S. bank, U.S.financial holding company, or U.S. bank


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42 If an SD or MSP established in any otherjurisdiction files an application for registrationbefore December 21, 2013, the Commission mayconsider a request for deferring compliance withthe Transaction-Level Requirements if a substitutedcompliance request is filed concurrently with theapplication.

The Commission notes that Transaction-LevelRequirements apply on a transaction-by-transactionbasis. As described in the Guidance, if a SubstitutedCompliance Determination is applicable to thejurisdiction in which a foreign branch of a U.S.bank is located for the relevant regulatoryrequirements and the branch enters into a swap(either in the jurisdiction in which it is located oranother jurisdiction), then the branch can elect tocomply with either the regulatory regime of thejurisdiction in which it is located for which theSubstituted Compliance Determination has beenmade, or the comparable Category A Transaction-Level Requirements.

43For purposes of this Exemptive Order, marketparticipants must use the term foreign branchand the interpretation of when a swap is with aforeign branch set forth in the Guidance. SeeGuidance regarding the types of offices which theCommission would consider to be a foreignbranch of a U.S. bank, and the circumstances inwhich a swap is with such foreign branch.

44The Commission has adopted regulations fordetermining when a swap is available to tradeand a compliance schedule for the trade executionrequirement that applies when a swap subject tomandatory clearing is available to trade. At the

present time, no swap either has been determinedto be made available to trade or is subject to thetrade execution requirement. See Process for aDesignated Contract Market or Swap ExecutionFacility To Make a Swap Available to Trade, SwapTransaction Compliance and ImplementationSchedule, and Trade Execution Requirement Underthe Commodity Exchange Act, 78 FR 33606 (Jun. 4,2013). See CEA section 2(h)(8) and 17 CFR 37.12or 38.11.

45As used in the Exemptive Order, the termguaranteed affiliate refers to a non-U.S. personthat is affiliated with a U.S. person and guaranteedby a U.S. person. In addition, for purposes of theExemptive Order, the Commission interprets theterm guarantee generally to include not onlytraditional guarantees of payment or performance of

the related swaps, but also other formalarrangements that, in view of all the facts andcircumstances, support the non-U.S. personsability to pay or perform its swap obligations withrespect to its swaps. See Proposed Guidance, 77 FRat 41221 n. 47. The term guarantee encompassesthe different financial arrangements and structuresthat transfer risk directly back to the United States.In this regard, it is the substance, rather than theform, of the arrangement that determines whetherthe arrangement should be considered a guaranteefor purposes of the Exemptive Order.

4677 FR 47170, 47209 (Aug. 7, 2012).47The ODSGs group of 14 dealers included: Bank

of America-Merrill Lynch; Barclays Capital; BNPParibas; Citi; Credit Suisse; Deutsche Bank AG;

Continued

holding company with temporary relieffrom the SDR reporting requirements ofpart 45 and part 46 of the Commissionsregulations with respect to swaps withnon-U.S. counterparties on thecondition that, during the relief period:(i) Such non-U.S. SDs and non-U.S.MSPs are in compliance with the swapdata recordkeeping and reporting

requirements of their homejurisdictions; or (ii) where no swap datareporting requirements have beenimplemented in their homejurisdictions, such non-U.S. SDs andnon-U.S. MSPs comply with therecordkeeping requirements ofCommission regulations 45.2, 45.6, 46.2and 46.4. This relief will expire theearlier of December 21, 2013 or, in theevent of a Substituted ComplianceDetermination for the regulatoryrequirements of parts 45 and 46 for thejurisdiction in which the non-U.S. SD ornon-U.S. MSP is established, 30 days

following the issuance of suchSubstituted Compliance Determination.

3. Application of Transaction-LevelRequirements

i. Application to U.S. SDs and MSPs

Generally, U.S. SDs and MSPs mustcomply with all Transaction-LevelRequirements that are in effect. Asdescribed in the Guidance, however, aforeign branch of a U.S. SD or MSP thatenters into a swap with a non-U.S.counterparty would be able to complywith the requirements of the local lawand regulations in the foreign location

of the branch in lieu of compliance withCategory A Transaction-LevelRequirements if the Commission hasmade a Substituted ComplianceDetermination with respect to thoseregulatory requirements. Additionally,as described in the Guidance, a foreign

branch of a U.S. bank that is an SD orMSP need not comply with Category BTransaction-Level Requirements unlessits swap counterparty is a U.S. personother than a foreign branch of a U.S.

bank that is an SD or MSP.Given that the Guidance is being

issued now, and that the Commission

did not receive any submissions insupport of Substituted ComplianceDeterminations with sufficient time toreview them and reach a finaldetermination, the Commission hasdetermined to temporarily defercompliance with the Category ATransaction-Level Requirements byforeign branches of U.S. banks if theyare located in any of the sixjurisdictions for which the Commissionhas received, or expects to receive in thenear term, a request for substitutedcompliance determinations, for

transactions for which substitutedcompliance is possible under theGuidance for such entities.42Accordingly, under the ExemptiveOrder, a foreign branch 43 of a U.S. bankthat is an SD or MSP, and which islocated in Australia, Canada, theEuropean Union, Hong Kong, Japan, orSwitzerland, may comply with any law

and regulations of the jurisdictionwhere the foreign branch is located (andonly to the extent required by suchjurisdiction) in lieu of complying withany Category A Transaction-LevelRequirement for which substitutedcompliance would be possible under theGuidance (other than a clearingrequirement under CEA section 2(h)(1),Commission regulations under part 50,and Commission regulation 23.506; atrade execution requirement under CEAsection 2(h)(8) and regulation 37.12 or38.11; 44 or a real-time reportingrequirement under part 43 of the

Commission regulations for swaps withguaranteed affiliates 45 of a U.S. person),

until the earlier of December 21, 2013 or30 days following the issuance of aSubstituted Compliance Determinationfor the relevant regulatory requirementsof the country in which the foreign

branch is located. For swapstransactions with guaranteed affiliates ofa U.S. person, a foreign branch of a U.S.SD or MSP established in Australia,

Canada, the European Union, HongKong, Japan or Switzerland may complywith the law and regulations of thejurisdiction where the foreign branch islocated related to real-time reporting(and only to the extent required by suchjurisdiction) in lieu of complying withthe real-time reporting requirements ofpart 43 of the Commission regulationsuntil September 30, 2013. In the case ofswaps with guaranteed affiliates of aU.S. person, the Commission believesthat it the real-time reportingrequirements of part 43 of theCommissions regulations should be

effective as expeditiously as possible inorder to achieve their underlyingstatutory objectives. Therefore, theCommission has determined that itwould not be in the public interest tofurther delay reporting under part 43 ofthe Commissions regulations withrespect to such swaps beyondSeptember 30, 2013.

With respect to a swap that is subjectto the clearing requirement under CEAsection 2(h)(1), Commission regulationsunder part 50, and Commissionregulation 23.506, any foreign branch ofa U.S. bank that is an SD or MSP thatwas not required to clear under the

January Order may delay complyingwith such clearing requirement until 75days after the publication of theGuidance in the Federal Register. Asthe Commission explained in theClearing Requirement Determinationproposal,46 the movement of swaps intocentral clearing by swap dealers has

been taking place for many years. Aspart of the OTC Derivatives SupervisorsGroup (ODSG), the Federal ReserveBank of New York led an effort alongwith the primary supervisors of certainswap dealers 47 to enhance risk


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Goldman Sachs & Co.; HSBC Group, J.P. Morgan;Morgan Stanley; The Royal Bank of Scotland Group;SocieteGenerale; UBS AG; and Wells Fargo BankN.A.

48See Clearing Requirement Determination underSection 2(h) of the CEA, 77 FR 74284, 74285 (Dec.13, 2013).

49See Guidance regarding when a non-U.S.person generally would be considered to be anaffiliate conduit.

50The Commission notes that Transaction-LevelRequirements apply on a transaction-by-transactionbasis. As described in the Guidance, if a SubstitutedCompliance Determination is applicable to thejurisdiction in which a non-U.S. SD or non-U.S.

MSP is established and that entity enters into aswap (either in the jurisdiction in which it isestablished or another jurisdiction), then the entitycan elect to comply with either the regulatoryregime of the jurisdiction in which it is establishedfor which the Substituted ComplianceDetermination has been made, or the comparableCategory A Transaction-Level Requirements.

51 If an SD or MSP established in any otherjurisdiction files an application for registrationbefore December 21, 2013, the Commission mayconsider a request for deferring compliance withthe Transaction-Level Requirements if a substitutedcompliance request is filed concurrently with theapplication.

52The Commission has adopted regulations fordetermining when a swap is available to trade

and a compliance schedule for the trade executionrequirement that applies when a swap subject tomandatory clearing is available to trade. At thepresent time, no swap either has been determinedto be made available to trade or is subject to the

trade execution requirement. See Process for aDesignated Contract Market or Swap ExecutionFacility To Make a Swap Available to Trade, SwapTransaction Compliance and ImplementationSchedule, and Trade Execution Requirement Underthe Commodity Exchange Act, 78 FR 33606 (Jun. 4,2013). See CEA section 2(h)(8) and 17 CFR 37.12or 38.11.

53The Commission anticipates that non-U.S. SDand MSPs may require additional time after aSubstituted Compliance Determination in order tophase in compliance with the relevant requirementsof the jurisdiction in which the non-US SD or MSPis established. The Commission and its staff intendto address the need for any further transitionalrelief at the time that the subject SubstitutedCompliance Determination is made.

mitigation practices for OTC derivatives,a key element of which wasintroduction of and commitment tocentral clearing of swaps, includingclearing CDS (credit default swap)indices and interest rate swaps. Clearingis at the heart of the Dodd-Frankfinancial reform.48

With regard to the CDS indices that

are subject to the Commissions clearingdetermination rules, SDs and othermarket participants have been workingsince 2008 to comply with theircommitment to their ODSG supervisorsto clear CDS. Similarly, while clearingof interest rate swaps began in the late1990s, SDs and other marketparticipants began committing in themid-2000s to clear interest rate swaps insignificant volumes. The SDcommitments included both dealer-to-dealer clearing, as well as clearing by

buy-side participants and others.Because SDs and MSPs have been

committed to clearing their CDS andinterest rate swaps for many years, andindeed have been voluntarily clearingfor many years, any further delay of theCommissions clearing requirement isunwarranted.

In addition, under this ExemptiveOrder, a foreign branch of a U.S. SD orMSP located in any jurisdiction otherthan Australia, Canada, EuropeanUnion, Hong Kong, Japan orSwitzerland may comply with any lawand regulations of the jurisdictionwhere the foreign branch is located (andonly to the extent required by such

jurisdiction) for the relevantTransaction-Level Requirement in lieuof complying with any Transaction-Level Requirement for whichsubstituted compliance would bepossible under the CommissionsGuidance until 75 days after thepublication of the Guidance in theFederal Register.

ii. Application to Non-U.S. SDs andNon-U.S. MSPs

As described in the Guidance, a non-U.S. SD or non-U.S. MSP shouldgenerally comply with the Category ATransaction-Level Requirements for its

swaps with U.S. persons and with non-U.S. persons that are guaranteed by, orare affiliate conduits of,49 a U.S. person(although substituted compliance would

generally be available to a non-U.S. SDor non-U.S. MSP for transactions with(1) foreign branches of a U.S. bank thatis an SD or MSP and (2) guaranteedaffiliates or affiliate conduits of a U.S.person). Additionally, as described inthe Guidance, a non-U.S. SD or non-U.S.MSP would generally need to complywith Category B Transaction-Level

Requirements for all swaps with a U.S.person (other than a foreign branch of aU.S. bank that is an SD or an MSP).

Given that the Guidance is beingissued now, and that the Commissiondid not receive any submissions insupport of Substituted ComplianceDeterminations with sufficient time toreview them and reach a finaldetermination, the Commission hasdetermined to temporarily defercompliance with the Category ATransaction-Level Requirements by non-U.S. SDs and non-U.S. MSPs establishedin any of the six jurisdictions for which

the Commission has received, or expectsto receive in the near term, a request forsubstituted compliance determinationsfor transactions for which substitutedcompliance is possible under theGuidance for such entities.50Accordingly, under the ExemptiveOrder, a non-U.S. SD or non-U.S. MSPestablished in Australia, Canada,European Union, Hong Kong, Japan orSwitzerland 51 may comply with anylaw and regulations of the homejurisdiction where such non-U.S. SD ornon-U.S. MSP is established (and onlyto the extent required by suchjurisdiction) in lieu of complying with

any Category A Transaction-LevelRequirement for which substitutedcompliance would be possible under theCommissions Guidance (other than aclearing requirement under CEA section2(h)(1), Commission regulations underpart 50, and Commission regulation23.506; a trade execution requirementunder CEA section 2(h)(8) andregulation 37.12 or 38.11; 52 or a real-

time reporting requirement under part43 of the Commission regulations forswaps with guaranteed affiliates of aU.S. person), until the earlier ofDecember 21, 2013 or 30 days followingthe issuance of a SubstitutedCompliance Determination for therelevant regulatory requirements of thejurisdiction in which the non-U.S. SD or

non-U.S. MSP is established.53 For swaptransactions with guaranteed affiliates ofa U.S. person under the CommissionsGuidance, a non-U.S. SD or non-U.S.MSP established in Australia, Canada,the European Union, Hong Kong, Japanor Switzerland may comply with anylaw and regulations of the homejurisdiction where such non-U.S. SD ornon-U.S. MSP is established related toreal-time reporting requirements (andonly to the extent required by suchhome jurisdiction) in lieu of complyingwith the real-time reportingrequirements of part 43 of the

Commission regulations, untilSeptember 30, 2013. In the case ofswaps with guaranteed affiliates of aU.S. person, the Commission believesthat the real-time reportingrequirements of part 43 of theCommissions regulations should beeffective as expeditiously as possible inorder to achieve their underlyingstatutory objectives. Therefore, theCommission has determined that itwould not be in the public interest tofurther delay reporting under part 43 ofthe Commissions regulations withrespect to such swaps beyond

September 30, 2013.With respect to a swap that is subjectto the clearing requirement under CEAsection 2(h)(1), Commission regulationsunder part 50, and Commissionregulation 23.506, any non-U.S. SD ornon-U.S. MSP that was not required toclear under the January Order may delaycomplying with such clearingrequirement until 75 days after the


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54See discussion, supra.55CEA section 4(c)(1), 7 U.S.C. 6(c)(1).

56H.R. Conf. Rep. No. 102978, 1992U.S.C.C.A.N. 3179, 3213 (1992).

57See section 752(a) of the Dodd-Frank Act.

5844 U.S.C. 3501 et seq.597 U.S.C. 19(a).

publication of the Guidance in theFederal Register.54

In addition, under this ExemptiveOrder, for swaps transactions withguaranteed affiliates of a U.S. person, anon-U.S. SD or a non-U.S. MSPestablished in any jurisdiction otherthan Australia, Canada, EuropeanUnion, Hong Kong, Japan or

Switzerland may comply with any lawand regulations of the home jurisdictionwhere such non-U.S. SD or non-U.S.MSP is established (and only to theextent required by such jurisdiction) inlieu of complying with any Transaction-Level Requirement for whichsubstituted compliance would bepossible under the CommissionsGuidance until 75 days after thepublication of the Guidance in theFederal Register.

iii. Application to Non-Registrants

Under this Exemptive Order, forswaps transactions between aguaranteed affiliate of a U.S. person(established in any jurisdiction outsidethe United States) that is not registeredas a SD or MSP and another guaranteedaffiliate of a U.S. person(established inany jurisdiction outside the UnitedStates) that is not registered as a SD orMSP, such non-registrants may complywith any law and regulations of thejurisdiction where they are established(and only to the extent required by suchjurisdictions) for the relevantTransaction-Level Requirement in lieuof complying with any Transaction-Level Requirement for which

substituted compliance would bepossible under the CommissionsGuidance until 75 days after thepublication of the Guidance in theFederal Register.

IV. Section 4(c) of the CEA

Section 4(c)(1) of the CEA authorizesthe Commission to promoteresponsible economic or financialinnovation and fair competition byexempting any transaction or class oftransaction from any of the provisions ofthe CEA (subject to certain exceptions)where the Commission determines that

the exemption would be consistent withthe public interest and the purposes ofthe CEA.55 Under section 4(c)(2) of theCEA, the Commission may not grantexemptive relief unless it determinesthat: (1) The exemption is appropriatefor the transaction and consistent withthe public interest; (2) the exemption isconsistent with the purposes of theCEA; (3) the transaction will be enteredinto solely between appropriate

persons; and (4) the exemption will nothave a material adverse effect on theability of the Commission or anycontract market to discharge itsregulatory or self-regulatoryresponsibilities under the CEA.

The Commission has determined thatthe Exemptive Order meets therequirements of CEA section 4(c). First,

in enacting section 4(c), Congress notedthat the purpose of the provision is togive the Commission a means ofproviding certainty and stability toexisting and emerging markets so thatfinancial innovation and marketdevelopment can proceed in an effectiveand competitive manner. 56 Like the

January Order, the Commission isissuing this relief in order to ensure anorderly transition to the Dodd-Frankregulatory regime.

This exemptive relief also willadvance the congressional mandateconcerning harmonization ofinternational standards with respect toswaps, consistent with section 752(a) ofthe Dodd-Frank Act. In that section,Congress directed that, in order topromote effective and consistent globalregulation of swaps and security-basedswaps, the Commission, asappropriate, shall consult andcoordinate with foreign regulatoryauthorities on the establishment ofconsistent international standards withrespect to the regulation of swaps andsecurity-based swaps.57 This relief, byproviding non-U.S. registrants thelatitude necessary to develop andmodify their compliance plans as the

regulatory structure in their respectivehome jurisdictions evolve, will promotethe adoption and enforcement of robustand consistent standards acrossjurisdictions. The Commissionemphasizes that the Exemptive Order istemporary in duration and reserves theCommissions enforcement authority,including its anti-fraud and anti-manipulation authority. As such, theCommission has determined that theExemptive Order is consistent with thepublic interest and purposes of the CEA.For similar reasons, the Commission hasdetermined that the Exemptive Order

will not have a material adverse effecton the ability of the Commission or anycontract market to discharge itsregulatory or self-regulatory dutiesunder the CEA. Finally, the Commissionhas determined that the ExemptiveOrder is limited to appropriate personswithin the meaning of CEA section4c(3), since the SDs and MSPs eligiblefor the relief are likely to be the types

of entities enumerated in that sectionand active in the swaps market.Therefore, upon due consideration,pursuant to its authority under section4(c) of the CEA, the Commission herebyissues the Exemptive Order.

V. Paperwork Reduction Act

The Paperwork Reduction Act

(PRA)58 imposes certainrequirements on Federal agencies inconnection with their conducting orsponsoring any collection ofinformation as defined by the PRA. Anagency may not conduct or sponsor, anda person is not required to respond to,a collection of information unless itdisplays a currently valid controlnumber.

The Exemptive Order does not requirethe collection of any information asdefined by the PRA.

VI. Cost-Benefit Considerations

Section 15(a) of the CEA 59 requiresthe Commission to consider the costsand benefits of its actions beforepromulgating a regulation under theCEA or issuing certain orders. Section15(a) further specifies that the costs and

benefits shall be evaluated in light offive broad areas of market and publicconcern: (1) Protection of marketparticipants and the public; (2)efficiency, competitiveness andfinancial integrity of futures markets; (3)price discovery; (4) sound riskmanagement practices; and (5) otherpublic interest considerations. TheCommission considers the costs and

benefits resulting from its discretionarydeterminations with respect to thesection 15(a) factors.

A. Introduction

Throughout the Dodd-Frankrulemaking process, the Commissionhas strived to ensure that newregulations designed to achieve Dodd-Franks protections are implemented ina manner that is both timely and alsominimizes unnecessary marketdisruption. In its effort to implement theDodd-Frank regulations on a cross-

border basis, the Commissions

approach has not been different. In thisrespect, the Commission has attemptedto be responsive to industrys concernsregarding implementation and thetiming of new compliance obligations,and thereby to ensure that marketpractices would not be unnecessarilydisrupted during the transition to thenew swaps regulatory regime. At thesame time, however, the Commissionhas endeavored to comply with the


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60See generallyCFTCSEC Joint Report onInternational Swap Regulation Required by Section719(c) of the Dodd-Frank Wall Street Reform andConsumer Protection Act at 10509 (Jan. 31, 2012),available at http://www.cftc.gov/ucm/groups/public/@swaps/documents/file/dfstudy_isr_013112.pdf.

Congressional mandate to implementthe new SD and MSP regulatory schemein a timely manner. The Commission,therefore, also seeks to ensure that theimplementation of these requirements isnot subject to undue delay. TheCommission believes that the ExemptiveOrder strikes the proper balance

between promoting an orderly transition

to the new regulatory regime under theDodd-Frank Act, while appropriatelytailoring relief to ensure that marketpractices are not unnecessarilydisrupted during such transition.

The Exemptive Order also reflects theCommissions recognition thatinternational coordination is essential inthis highly interconnected globalmarket, where risks are transmittedacross national borders and marketparticipants operate in multiplejurisdictions.60 The Exemptive Orderwould allow market participants toimplement the calculations related to

SD and MSP registration on a uniformbasis and to delay compliance withcertain Dodd-Frank requirements whilethe Commission continues to workclosely with other domestic financialregulatory agencies and its foreigncounterparts in an effort to furtherharmonize the cross-border regulatoryframework.

B. Consideration of Costs and Benefitsof the Exemptive Order

The Exemptive Order permits, subjectto the conditions specified therein,market participants outside the UnitedStates to: (i) Apply the January Orders

limited, interim definition of the termU.S. person for a period of 75 days;(ii) make the SD and MSP registrationcalculations in accordance with the

January Orders guidance for a period of75 days; and (iii) delay compliance withcertain Dodd-Frank requirementsspecified in the Exemptive Order. TheExemptive Order reflects theCommissions determination to protectU.S. persons and markets through thecross-border application of theprovisions of the Dodd-Frank Act andthe Commissions regulations in amanner consistent with section 2(i) of

the CEA and longstanding principles ofinternational comity. By carefullytailoring the scope and extent of thephasing-in provided by the ExemptiveOrder, the Commission believes that itachieves an appropriately balancedapproach to implementation that

mitigates the costs of compliance whileavoiding open-ended delay in protectingthe American public from swapsactivities overseas. To be sure, theconditions attached to the ExemptiveOrder are not without cost, but theCommission believes that the phasing-inof certain Dodd-Frank requirements aspermitted by the Exemptive Order will

reduce overall costs to marketparticipants.

In the absence of the ExemptiveOrder, non-U.S. SDs or MSPs would berequired to be fully compliant with theDodd-Frank regulatory regime withoutfurther delay. The Exemptive Orderallows non-U.S. SDs and MSPs (andforeign branches of U.S. SDs and MSPs)to delay compliance with a number ofthese requirements until (at latest)December 21, 2013. With respect tothese entities, therefore, the benefitsinclude not only the avoided costs ofcompliance with certain requirements

during the time that the ExemptiveOrder is in effect, but also increasedefficiency, because the additional timeallowed to phase in compliance willallow market participants moreflexibility to implement compliance in away that is compatible with theirsystems and practices. The additionaltime provided by the Exemptive Orderwill also give foreign regulators moretime to adopt regulations coveringsimilar topics, which could increase thelikelihood that substituted compliancewill be an option for marketparticipants. Thus, the Exemptive Orderis expected to help reduce the costs to

market participants of implementingcompliance with certain Dodd-Frankrequirements. These and other costs and

benefits are considered below.

1. Costs

The costs of the Exemptive Order aresimilar to those of the January Order.One potential cost, which is difficult toquantify, is the potential that the reliefprovided hereinwhich will delay theapplication of certain Dodd-Frankrequirements to non-US SDs and MSPsand to foreign branches of U.S. SDs andMSPswill leave market participants

without certain protections and willleave U.S. taxpayers exposed tosystemic risks. As with the JanuaryOrder, however, the Commission

believes that these risks are mitigated bythe relatively short time period of theExemptive Orders application.

When the Commission issued theJanuary Order, it also considered thepossibility that the order could result incompetitive disparities from the delayin compliance permitted to non-U.S.market participants, discouragingpotential non-U.S. counterparties from

engaging in swaps with U.S. persons. Asthe Commission noted in the JanuaryOrder, it was difficult to estimatequantitatively the potential negativeeffects that the January Order wouldhave on U.S. SDs and MSPs. Similarly,while the Commission cannot excludethe possibility that the Exemptive Ordercould result in negative competitiveeffects on U.S. SDs and MSPs, it would

be difficult to estimate those potentialnegative effects quantitatively.Nevertheless, the Commission notesthat, in the six months since it issuedthe January Order, it has not observedsignificant competitive disparities thatdiscouraged potential non-U.S.counterparties from engaging in swapswith U.S. SDs and MSPs. Given theshort time period of the ExemptiveOrders application, the Commission

believes it is unlikely that theExemptive Order (which is more limited

in scope than the January Order) willcause significant competitive disparitiesthat will harm U.S. SDs and MSPs.

2. Benefits

As with the January Order, theprimary benefit of the Exemptive Orderis that it affords entities additional timeto come into compliance with certain ofthe Commissions regulations. Byphasing in (1) the term U.S. person,(2) SD and MSP calculations, and (3) theapplication of various Entity- andTransaction-Level requirements topersons in six jurisdictions outside the

U.S., the Exemptive Order will reducecompliance costs for such persons. Thisrelief will provide market participantswith the additional time that they needfor an orderly transition and will allowmarket participants to apply the Dodd-Frank requirements flexibly to theirparticular circumstances.

Importantly, the Exemptive Orderallows non-U.S. SDs and non-U.S. MSPsand foreign branches of U.S. SDs andMSPs from six jurisdictions to delaycompliance with Entity-LevelRequirements (as defined in the

Exemptive Order) and Transaction-Level Requirements (other than clearingand trade execution) for whichsubstituted compliance is possible, asdescribed in the Guidance. This delaywill permit the Commission to properlydevelop the scope and standards of itssubstituted compliance regime byallowing foreign regulators additionaltime to implement regulatory changesnecessary to facilitate the Commissionsdetermination of comparability.

http://www.cftc.gov/ucm/groups/public/@swaps/documents/file/dfstudy_isr_013112.pdfhttp://www.cftc.gov/ucm/groups/public/@swaps/documents/file/dfstudy_isr_013112.pdfhttp://www.cftc.gov/ucm/groups/public/@swaps/documents/file/dfstudy_isr_013112.pdfhttp://www.cftc.gov/ucm/groups/public/@swaps/documents/file/dfstudy_isr_013112.pdfhttp://www.cftc.gov/ucm/groups/public/@swaps/documents/file/dfstudy_isr_013112.pdfhttp://www.cftc.gov/ucm/groups/public/@swaps/documents/file/dfstudy_isr_013112.pdfhttp://www.cftc.gov/ucm/groups/public/@swaps/documents/file/dfstudy_isr_013112.pdfhttp://www.cftc.gov/ucm/groups/public/@swaps/documents/file/dfstudy_isr_013112.pdfhttp://www.cftc.gov/ucm/groups/public/@swaps/documents/file/dfstudy_isr_013112.pdfhttp://www.cftc.gov/

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61For this purpose, the Commission construesaffiliates to include persons under commoncontrol as stated in the Commissions final rulefurther defining the term swap dealer, whichdefines control as the possession, direct orindirect, of the power to direct or cause thedirection of the management and policies of aperson, whether through the ownership of votingsecurities, by contract or otherwise. See FinalEntities Rules, 77 FR at 30631, n. 437.

C. Section 15(a) Factors

1. Protection of Market Participants andthe Public

The exemptive relief provided in theExemptive Order will protect marketparticipants and the public byfacilitating a more orderly transition tothe new regulatory regime than might

otherwise occur in the absence of theorder. In particular, non-U.S. personsare afforded additional time to comeinto compliance than would otherwise

be the case, which contributes to greaterstability and reliability of the swapsmarkets during the transition process.

2. Efficiency, Competitiveness, andFinancial Integrity of the Markets

The Commission believes that theefficiency and integrity of the marketswill be furthered by the additionalcompliance time provided in theExemptive Order. As discussed above,

the Commission is mindful of thepossibility that the Exemptive Ordercould potentially cause competitivedisparities, but believes it is unlikelythat the Exemptive Order will causesignificant competitive disparities thatwill harm U.S. SDs and MSPs.

3. Price Discovery

The Commission has not identifiedany costs or benefits of the ExemptiveOrder with respect to price discovery.

4. Risk Management

As with the January Order,application of Entity-Level risk

management and capital requirementsto non-U.S. SDs and MSPs could bedelayed by operation of the ExemptiveOrder, which could weaken riskmanagement. However, such potentialrisk is limited by the fact that theExemptive Order is applicable for afinite time.

5. Other Public Interest Considerations

The Commission has not identifiedany other public interest considerationsrelating to costs or benefits of theExemptive Order.

VII. Exemptive Order

The Commission, in order to providefor an orderly implementation of TitleVII of the Dodd-Frank Wall StreetReform and Consumer Protection Act(Dodd-Frank Act), and consistentwith the determinations set forth above,which are incorporated in theExemptive Order by reference, herebygrants, pursuant to section 4(c) of theCommodity Exchange Act (CEA),time-limited relief to non-U.S. swapdealers (SDs) and major swapparticipants (MSPs) and to foreign

branches of U.S. SDs and MSPs, fromcertain swap provisions of the CEA,subject to the terms and conditions

below.(1) Phase-in of U.S. Person

Definition:For purposes of theExemptive Order, from July 13, 2013until 75 days after the InterpretiveGuidance and Policy Statement

Regarding Compliance with CertainSwap Regulations (Guidance) ispublished in the Federal Register, allmarket participants, including aprospective or registered SD or MSP,must apply a U.S. person definitionwhich would define the term as:

(i) A natural person who is a residentof the United States;

(ii) A corporation, partnership,limited liability company, business orother trust, association, joint-stockcompany, fund or any form of enterprisesimilar to any of the foregoing, in eachcase that is (A) organized or

incorporated under the laws of a state orother jurisdiction in the United States or(B) for all such entities other than fundsor collective investment vehicles,having its principal place of business inthe United States;

(iii) A pension plan for theemployees, officers or principals of alegal entity described in (ii) above,unless the pension plan is primarily forforeign employees of such entity;

(iv) An estate of a decedent who wasa resident of the United States at thetime of death, or a trust governed by thelaws of a state or other jurisdiction inthe United States if a court within the

United States is able to exercise primarysupervision over the administration ofthe trust; or

(v) An individual account or jointaccount (discretionary or not) where the

beneficial owner (or one of thebeneficial owners in the case of a jointaccount) is a person described in (i)through (iv) above.

Until 75 days after the Guidance ispublished in the Federal Register, anyperson not listed in (i) to (v) above is anon-U.S. person for purposes of theExemptive Order.

(2) Phase-In of Guaranteed Affiliates

and Affiliate Conduits:Guaranteedaffiliates and affiliate conduits do notneed to comply with Transaction-LevelRequirements relating to swaps withnon-U.S. persons and foreign branchesof U.S. swap dealers and MSPs until 75days after the Final Guidance ispublished in the Federal Register.

(3) De Minimis SD and MSPThreshold Calculations:From July 13,2013 until 75 days after the Guidance ispublished in the Federal Register, anon-U.S. person is not required toinclude, in its calculation of the

aggregate gross notional amount ofswaps connected with its swap dealingactivity for purposes of Commissionregulation 1.3(ggg)(4), or in itscalculation of whether it is an MSP forpurposes of Commission regulation1.3(hhh):

(i) Any swap where the counterpartyis not a U.S. person, or

(ii) Any swap where the counterpartyis a foreign branch of a U.S. person thatis registered as an SD.

(4) Aggregation for Purposes of the DeMinimis Calculation:From July 13, 2013until 75 days after the Guidance ispublished in the Federal Register, anon-U.S. person that was engaged inswap dealing activities with U.S.persons as of December 21, 2012 is notrequired to include, in its calculation ofthe aggregate gross notional amount ofswaps connected with its swap dealingactivity for purposes of Commissionregulation 1.3(ggg)(4), the aggregate

gross notional amount of swapsconnected with the swap dealingactivity of its U.S. affiliates undercommon control.61 Further, from July13, 2013 until 75 days after theGuidance is published in the FederalRegister, a non-U.S. person that wasengaged in swap dealing activities withU.S. persons as of December 21, 2012and is an affiliate under commoncontrol with a person that is registeredas an SD is also not required to include,in its calculation of the aggregate grossnotional amount of swaps connectedwith its swap dealing activity for

purposes of Commission regulation1.3(ggg)(4), the aggregate gross notionalamount of swaps connected with theswap dealing activity of any non-U.S.affiliate under common control that iseither (i) engaged in swap dealingactivities with U.S. persons as ofDecember 21, 2012 or (ii) registered asan SD. Also, from July 13, 2013 until 75days after the Guidance is published inthe Federal Register, a non-U.S. personis not required to include, in itscalculation of the aggregate grossnotional amount of swaps connectedwith its swap dealing activity forpurposes of Commission regulation1.3(ggg)(4), the aggregate gross notionalamount of swaps connected with theswap dealing activity of its non-U.S.affiliates under common control with


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62Final Exemptive Order Regarding Compliance

with Certain Swap Regulations, 78 FR 858 (Jan. 7,2013) (January Order).63For purposes of the Exemptive Order, the term

Entity-Level Requirements refers to therequirements set forth in Commission regulations3.3, 23.201, 23.203, 23.600, 23.601, 23.602, 23.603,23.605, 23.606, 23.608, 23.609, and parts 45 and 46.The Commission notes that it has not yet finalizedregulations regarding capital adequacy or marginand segregation for uncleared swaps. In the eventthat the Commission finalizes regulations regardingcapital adequacy or margin and segregation foruncleared swaps before December 21, 2013, non-U.S. SDs and non-U.S. MSPs would comply withsuch requirements in accordance with anycompliance date provided in the relevantrulemaking.

64Commission staff also extended no-action reliefregarding reporting in the cross-border context toaddress privacy law conflicts. See CFTC Division ofMarket Oversight, Time-Limited No-Action ReliefPermitting Part 45 and Part 46 ReportingCounterparties to Mask Legal Entity Identifiers,Other Enumerated Identifiers and Other IdentifyingTerms and Permitting Part 20 Reporting Entities toMask Identifying Information, with respect tocertain Enumerated Jurisdictions, No-Action LetterNo. 1341 (Jun. 28, 2013).

65For purposes of the Exemptive Order, the termTransaction-Level Requirements refers to therequirements set forth in Commission regulations23.202, 23.205, 23.400 to 23.451, 23.501, 23.502,23.503, 23.504, 23.505, 23.506, 23.610 and parts 43and 50. The Commission notes that (1) it has notyet finalized regulations regarding margin andsegregation for uncleared swaps and (2) it has notyet determined that any swap is available to tradesuch that a trade execution requirement applies tothe swap.

In addition, to the extent that a guaranteedaffiliate is given exemptive relief from anyparticular Transaction-Level Requirement underthis Exemptive Order, the same exemptive reliefwould apply to affiliate conduits.

66The Commission has adopted regulations fordetermining when a swap is available to tradeand a compliance schedule for the trade executionrequirement that applies when a swap subject to

mandatory clearing is available to trade. At thepresent time, no swaps no swap either has beendetermined to be made available to trade or issubject to a trade execution requirement. SeeProcess for a Designated Contract Market or SwapExecution Facility To Make a Swap Available toTrade, Swap Transaction Compliance andImplementation Schedule, and Trade ExecutionRequirement Under the Commodity Exchange Act,78 FR 33606 (Jun. 4, 2013). See CEA section 2(h)(8)and 17 CFR 37.12 or 38.11.

67As used in the Exemptive Order, the termguaranteed affiliate refers to a non-U.S. personthat is affiliated with a U.S. person and guaranteedby a U.S. person. In addition, for purposes of the

Exemptive Order, the Commission interprets theterm guarantee generally to include not onlytraditional guarantees of payment or performance ofthe related swaps, but also other formalarrangements that, in view of all the facts andcircumstances, support the non-U.S. personsability to pay or perform its swap obligations withrespect to its swaps. See Cross-Border Applicationof Certain Swaps Provisions of the CommodityExchange Act, 77 FR 41214, 41221 n. 47 (Jul. 12,2012). The term guarantee encompasses thedifferent financial arrangements and structures thattransfer risk directly back to the United States. Inthis regard, it is the substance, rather than the form,of the arrangement that determines whether thearrangement should be considered a guarantee forpurposes of the Exemptive Order.

other non-U.S. persons ascounterparties.

(5) SD Registration:A non-U.S. personthat was previously exempt fromregistration as an SD because of thetemporary relief extended to suchperson under the Commissionsexemptive order issued on January 7,2013,62but that is required to register as

an SD under Commission regulation 1.3(ggg)(4) because of changes to thescope of the term U.S. person orchanges in the de minimis SDcalculation or aggregation for purposesof the de minimis calculation, is notrequired to register as an SD until twomonths after the end of the month inwhich such person exceeds the deminimis threshold for SD registration.

(6) Entity-Level Requirements:(i) Non-U.S. SDs and non-U.S. MSPs.

Except as provided in (ii) of thisparagraph 6, a non-U.S. SD or non-U.S.MSP established in Australia, Canada,the European Union, Hong Kong, Japanor Switzerland need not comply withany Entity-Level Requirement 63 forwhich substituted compliance ispossible under the CommissionsGuidance until the earlier of December21, 2013 or 30 days following theissuance of an applicable substitutedcompliance determination under theGuidance (Substituted ComplianceDetermination) for the relevant Entity-Level Requirement of the jurisdiction inwhich the non-U.S. SD or non-U.S. MSPis established.

(ii) Notwithstanding paragraph (6)(i),non-U.S. SDs and non-U.S. MSPs

established in Australia, Canada, theEuropean Union, Hong Kong, Japan orSwitzerland that are not part of anaffiliated group in which the ultimateparent entity is a U.S. SD, U.S. MSP,U.S. bank, U.S. financial holdingcompany, or U.S. bank holdingcompany may delay compliance withthe swap data repository (SDR)reporting requirements of part 45 andpart 46 of the Commissions regulationswith respect to swaps with non-U.S.counterparties on the condition that,

during the relief period: (1) Such non-U.S. SDs and non-U.S. MSPs are incompliance with the swap datarecordkeeping and reportingrequirements of their homejurisdictions; or (2) where no swap datareporting requirements have beenimplemented in their homejurisdictions, such non-U.S. SDs and

non-U.S. MSPs comply with therecordkeeping requirements ofRegulations 45.2, 45.6, 46.2 and 46.4.This relief will expire the earlier ofDecember 21, 2013 or, in the event of aSubstituted Compliance Determinationfor the regulatory requirements of parts45 and 46 of the jurisdiction in whichthe non-U.S. SD or non-U.S. MSP isestablished, 30 days following theissuance of such SubstitutedCompliance Determination.64

(7) Transaction-Level RequirementsApplicable to Non-U.S. SDs andMSPs.65 A non-U.S. SD or non-U.S. MSP

established in Australia, Canada, theEuropean Union, Hong Kong, Japan orSwitzerland may comply with any lawand regulations of the home jurisdictionwhere such non-U.S. SD or non-U.S.MSP is established (and only to theextent required by such jurisdiction) inlieu of complying with any Transaction-Level Requirement for whichsubstituted compliance would bepossible under the CommissionsGuidance (other than a clearingrequirement under CEA section 2(h)(1),Commission regulations under part 50,and Commission regulation 23.506; a

trade execution requirement under CEAsection 2(h)(8) and regulation 37.12 or38.11; 66 or a real-time reporting

requirement under part 43 of theCommission regulations for swaps withguaranteed affiliates of a U.S. person),67until the earlier of December 21, 2013 or30 days following the issuance of aSubstituted Compliance Determinationfor the relevant regulatory requirementof the jurisdiction in which the non-U.S.SD or non-U.S. MSP is established.

(8) With respect to a swap that issubject to a clearing requirement underCEA section 2(h)(1), Commissionregulations under part 50, andCommission regulation 23.506, any non-U.S. SD or non-U.S. MSP that was notrequired to clear under the JanuaryOrder may delay complying with suchclearing requirement until 75 days afterthe publication of the Guidance in theFederal Register.

(9) For swaps transactions withguaranteed affiliates of a U.S. person, anon-U.S. SD or non-U.S. MSPestablished in Australia, Canada, theEuropean Union, Hong Kong, Japan orSwitzerland may comply with any lawand regulations of the home jurisdictionwhere such non-U.S. SD or non-U.S.MSP is established related to real-timereporting requirements (and only to theextent required by such homejurisdiction) in lieu of complying withthe real-time reporting requirements ofpart 43 of the Commission regulations,until September 30, 2013.

(10) For swaps transactions withguaranteed affiliates of a U.S. person, anon-U.S. SD or a non-U.S. MSPestablished in jurisdiction other thanAustralia, Canada, European Union,

Hong Kong, Japan or Switzerland maycomply with any law and regulations of


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68The Commission has adopted regulations fordetermining when a swap is available to tradeand a compliance schedule for the trade executionrequirement that applies when a swap subject tomandatory clearing is available to trade. At thepresent time, no swap either has been determinedto be made available to trade or is subject to a tradeexecution requirement. See Process for a DesignatedContract Market or Swap Execution Facility ToMake a Swap Available to Trade, Swap TransactionCompliance and Implementation Schedule, andTrade Execution Requirement Under theCommodity Exchange Act, 78 FR 33606 (Jun. 4,2013). See CEA section 2(h)(8) and 17 CFR 37.12or 38.11.

the home jurisdiction where such non-U.S. SD or non-U.S. MSP is established(and only to the extent required by suchjurisdiction) in lieu of complying withany Transaction-Level Requirement forwhich substituted compliance would bepossible under the CommissionsGuidance until 75 days after thepublication of the Guidance in the

Federal Register.(11) U.S. Registrants:The Exemptive

Order does not apply to a U.S. personthat is required to register as an SD orMSP. Notwithstanding the previoussentence, a foreign branch of a U.S. SDor MSP located in Australia, Canada, theEuropean Union, Hong Kong, Japan orSwitzerland may comply with any lawand regulations of the jurisdictionwhere the foreign branch is located (andonly to the extent required by suchjurisdiction) for the relevantTransaction-Level Requirement in lieuof complying with any Transaction-

Level Requirement for whichsubstituted compliance would bepossible under the CommissionsGuidance (other than a clearingrequirement under CEA section 2(h)(1),Commission regulations under part 50,and Commission regulation 23.506; atrade execution requirement under CEAsection 2(h)(8) and regulation 37.12 or38.11; 68 or a real-time reportingrequirement under part 43 of theCommission regulations for swaps withguaranteed affiliates of a U.S. person),until the earlier of December 21, 2013 or30 days following the issuance of a

Substituted Compliance Determinationfor the relevant Transaction-LevelRequirement in the applicablejurisdiction in which the foreign branchis located.

(12) With respect to a swap that issubject to the clearing requirementunder CEA section 2(h)(1), Commissionregulations under part 50, andCommission regulation 23.506, anyforeign branch of a U.S. SD or MSP thatwas not required to clear under the

January Order may delay complyingwith such clearing requirement until 75days after the publication of theGuidance in the Federal Register.

(13) For swaps transactions withguaranteed affiliates of a U.S. person, aforeign branch of a U.S. SD or MSPlocated in Australia, Canada, theEuropean Union, Hong Kong, Japan orSwitzerland may comply with the lawand regulations of the jurisdictionwhere the foreign branch is locatedrelated to real-time reporting (and only

to the extent required by suchjurisdiction) in lieu of complying withthe real-time reporting requirements ofpart 43 of the Commission regulationsuntil September 30, 2013.

(14) A foreign branch of a U.S. SD orMSP located in any jurisdiction otherthan Australia, Canada, EuropeanUnion, Hong Kong, Japan orSwitzerland may comply with any lawand regulations of the jurisdictionwhere the foreign branch is located (andonly to the extent required by suchjurisdiction) for the relevantTransaction-Level Requirement in lieu

of complying with any Transaction-Level Requirement for whichsubstituted compliance would bepossible under the CommissionsGuidance until 75 days after thepublication of the Guidance in theFederal Register.

(15) For swaps transactions between aguaranteed affiliate of a U.S. person(established in any jurisdiction outsidethe United States) that is not registeredas a SD or MSP and another guaranteedaffiliate of a U.S. person (established inany jurisdiction outside the UnitedStates) that is not registered as a SD orMSP, such non-registrants may comply

with any law and regulations of thejurisdiction where they are established(and only to the extent required by suchjurisdiction) for the relevantTransaction-Level Requirement in lieuof complying with any Transaction-Level Requirement for whichsubstituted compliance would bepossible under the CommissionsGuidance until 75 days after thepublication of the Guidance in theFederal Register.

(16) Inter-Affiliate Exemption. Whereone of the counterparties is electing theInter-Affiliate Exemption, nothing in

this Exemptive Order affects oreliminates the obligation of any party tocomply with the conditions of the Inter-Affiliate Exemption, including thetreatment of outward-facing swapscondition in Commission regulation50.52(b)(4)(i).

(17) Expiration of Relief:The reliefprovided to non-U.S. SDs, non-U.S.MSPs and foreign branches of a U.S. SDor U.S. MSP in this order shall beeffective on July 13, 2013 and expire onDecember 21, 2013 or such earlier datespecified in the Order.

(18) Scope of Relief:The time-limitedrelief provided in this order: (i) Shallnot affect, with respect to any swapwithin the scope of this order, theapplicability of any other CEA provisionor Commission regulation (i.e., thoseoutside the Entity-Level andTransaction-Level Requirements); (ii)shall not limit the applicability of any

CEA provision or Commissionregulation to any person, entity ortransaction except as provided in thisorder; (iii) shall not affect theapplicability of any provision of theCEA or Commission regulation tofutures contracts, or options on futurescontracts; and (iv) shall not affect anyeffective or compliance date set forth inany Dodd-Frank Act rulemaking by theCommission. Nothing in this orderaffects the Commissions enforcementauthority, including its anti-fraud andanti-manipulation authority.

Issued in Washington, DC, on July 16,

2013, by the Commission.Melissa D. Jurgens,

Secretary of the Commission.

Appendices to Exemptive Order RegardingCompliance With Certain SwapRegulationsCommission Voting Summaryand Chairmans Statement

Appendix 1Commission Voting Summary

On this matter, Chairman Gensler andCommissioners Chilton and Wetjen voted inthe affirmative. Commissioner OMalia votedin the negative.

Appendix 2Statement of Chairman GaryGensler

I support the Exemptive Order RegardingCompliance with Certain Swap Regulations(Order). With this Commission actionanother important step has been taken tomake swaps market reform a reality.

Since the enactment of the Dodd-FrankWall Street Reform and Consumer ProtectionAct (Dodd Frank Act), the Commission hasworked steadfastly toward a transition froman opaque unregulated marketplace to atransparent, regulated swaps marketplaceand has phased in the timing for complianceto give market participants time to adjust tothe new regulatory regime and smooth thetransition. The Order provides a phased-incompliance period for foreign swap dealers(including overseas affiliates of U.S. persons)

and overseas branches of U.S. swap dealerswith respect to certain requirements of theDodd-Frank Act.

Todays Order is a continuation of theCommissions commitment to this phasing ofcompliancein this case for foreign marketparticipantsand follows upon theCommissions January 2013 phase-inexemptive order, which expired on July 12,2013. The Order will remain in effect untilDecember 21, 2013, and is intended tocomplement other Commission and staffactions that facilitate an orderly transition.

As of July 12th, 80 swap dealers haveregistered with the Commission. Of these, 35


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1Available online at http://www.dtic.mil/whs/directives/corres

Documents

2013-17467