Alert June 18, 2013

CFTC Grants Time-Limited No-Action Relief to Small Banks from Board Approval Requirement of End-User Exception to Clearing

The CFTC’s Division of Clearing and Risk issued a time-limited no-action relief letter applicable to small banks (those with total assets of $10 billion or less and organized as a bank, savings association, farm credit system institution, or insured Federal or State-chartered credit union).  The relief provides that small banks that are issuers of securities may avail themselves of the end-user exception to the swap clearing requirement without obtaining prior board of directors approval for entering into uncleared swaps, provided that the small bank meets the other requirements of the end-user exception.  The relief is also conditional on the small bank obtaining retroactive board approval as soon as practicable, but no later than July 10, 2013.