“CFTC Staff Provides Informal Relief for Securitization Vehicles from Compliance with New Swap Clearing Rules”
The Commodity Futures Trading Commission (the “CFTC”) staff recently advised the American Securitization Forum that securitization vehicles entering into interest rate swaps containing terms standard in the industry will not have to comply with the new swap clearing provisions of the Commodity Exchange Act. The CFTC staff gave this advice orally and stated that it will not provide a written response before June 10, 2013, the date when securitization vehicles would be required to begin complying with the swap clearing provisions. It is unknown if the CFTC staff will provide a written response or other formal interpretation after that date.
Although the industry welcomed these developments, the lack of a written response from the CFTC staff, coupled with ambiguous language in the release accompanying the final swap clearing provisions, creates uncertainty in this area.
This Stroock Special Bulletin examines the background to the new swap clearing provisions, the role of a clearing organization, the swaps to be cleared under the swap clearing provisions, the effective dates, by entity type, for compliance with the clearing requirements, and other product specifications.