The CFTC Issued a Third Wave of No-Action Relief in View of the COVID-19 Pandemic and the NFA Followed Suit
On Friday, March 20, 2020, the CFTC announced its third wave of temporary no-action relief to market participants from compliance with certain regulatory requirements that are difficult or impossible to comply with in light of the COVID-19 pandemic. The Division of Swap Dealer and Intermediary Oversight (DSIO) issued two additional no-action letters that provide temporary relief to a major insured depository institution (IDI) and commodity pool operators relating to specific regulatory requirements. CFTC Chairman Tarbet expressly stated that: “I want to encourage market participants to engage the CFTC early and often as market developments continue to unfold.” The CFTC appears to be responding rapidly to the COVID-19-related issues raised by market participants. The NFA joined the CFTC and provided temporary no-action relief to CPO members from the corresponding NFA rules.
Temporary Targeted No-Action Relief for an Insured Depository Institution
DSIO granted temporary, targeted no-action relief to a major IDI from considering energy-related commodity swaps in determining whether the IDI must register with the CFTC as a major swap participant (MSP). Due to the nature of the IDI’s lending and risk management business with energy and exploration customers, the volatility and low prices resulting from the COVID-19 pandemic have led to an unprecedented increase in the IDI’s measures relevant to the MSP registration threshold. The relief will expire on September 30, 2020.
Temporary No-Action Relief from Certain Reporting Requirements for CPOs
DSIO will refrain from recommending enforcement actions for failure to comply with the following reporting requirement subject to the conditions set forth in the letters being met. The no-action relief applies through June 30, 2020.
Form CPO-PQR. DSIO granted temporary no-action relief relating to the filing of Form CPO-PQR under CFTC Regulation 4.27. The time for small or mid-sized CPOs to file an annual report to the Commission is extended to May 15, 2020. The time for large CPOs to file a quarterly report for Q1 2020 is extended to July 15, 2020.
Pool Annual Reports. DSIO granted temporary no action relief relating to the filing of annual reports under CFTC Regulation 4.7(b)(3) and 4.22(c). CPOs with a pool annual report due by April 30, 2020 have a 45-day extension to file with certified financial statements with the NFA and distribute to pool participants.
Pool Periodic Account Statements. DSIO granted temporary no-action relief relating to the distribution of account statements under CFTC Regulations 4.7(b)(2) and 4.22(b). CPOs with a deadline of April 30, 2020 to distribute periodic account statements to pool participants have a 45-day extension to comply.
Temporary No-Action Relief for CPO and CTA Members
Joining the CFTC, on March 23, 2020 the NFA issued temporary no-action relief to CPO Members from similar NFA reporting requirements provided that CPO Members comply with the terms of the CFTC’s March 20, 2020 no-action letters. NFA is also extending by 45 days the time for CTAs to provide NFA with NFA Form PR, due to be filed by June 30, 2020.
1 CFTC Release No. 8136-20 (Mar. 20, 2020) available at https://www.cftc.gov/PressRoom/PressReleases/8136-20.
2 CFTC Letter No. 20-10 (Mar. 20, 2020).
3 CFTC Letter No. 20-11 (Mar. 20, 2020).
4 NFA Notice to Members 1-20-15 (Mar. 23, 2020) available at https://www.nfa.futures.org/news/newsNotice.asp?ArticleID=5218.