Alert December 18, 2012

CFTC Provides No-Action Relief for Swap Dealers and Major Swap Participants from Compliance with Prohibition Against Association with Certain Persons

The CFTC’s Division of Swap Dealer and Intermediary Oversight provided no-action relief pertaining to swap dealers and major swap participants from the prohibition against association with certain persons subject to statutory disqualification.  The Commodity Exchange Act, as amended by the Dodd-Frank Act, requires swap dealers and major swap participants not to permit any person associated with a swap dealer or major swap participant (an “Associated Person”) who is subject to a statutory disqualification (such as those who have violated certain laws) to effect or be involved in effecting swaps on behalf of the swap dealer or major swap participant.  The relief, which responds to a recommendation from the National Futures Association, provides that swap dealers and major swap participants need not comply with this prohibition with respect to persons who fall into either of the following categories: (1) non-domestic Associated Persons who deal only with non-domestic swap counterparties and (2) persons employed in a clerical or ministerial capacity.