CFTC Provides Further Relief to Market Participants on Brexit Transition

The Commodity Futures Trading Commission's Market Participants Division (MPD) and Division of Clearing and Risk (DCR) has jointly issued no-action relief, effective 4 December 2020, to provide greater certainty to the global marketplace in connection with the withdrawal of the United Kingdom from the European Union, known as Brexit.

The relief permits market participants to transfer certain swaps to an affiliate without such swaps becoming subject to the CFTC's swap clearing requirement or uncleared swap margin requirement. The relief applies to transfers that occur up to one year following the conclusion of the Brexit transition period.

"The derivatives markets are among the most interconnected in the world, and the City of London is a critical part of that financial system," said DCR Director Clark Hutchison. "This relief will help ensure that our markets will not be adversely affected by the anticipated end of the transition period later this month."

The CFTC has taken a number of other steps to facilitate a smooth transition upon the withdrawal of the UK from the EU. Last month, MPD and the Division of Market Oversight extended temporary no-action relief. In addition, in February of 2019, the CFTC, the Bank of England and its Prudential Regulation Authority, and the Financial Conduct Authority issued a statement regarding the continuity of derivatives trading and clearing post-Brexit.