CFTC Staff Issues No-Action Letter Regarding the Migration of Credit Default Swaps from ICE Clear Europe Ltd.

In view of the discontinuations of credit default swap (CDS) clearing services by ICE Clear Europe Ltd. (ICEU) in October 2023, the Commodity Futures Trading Commission’s (CFTC) Division of Market Oversight (DMO) has issued a no action relief letter (23-05) for affected counterparties of open CDS positions at ICEU. This no-action relief will permit market participants to transfer their open positions to other central counterparties (CCPs) in a „non-price forming, market risk neutral manner“ as outlined in the letter.
Specifically, the DMO is granting relief from enforcement action for
– any person that fails „to comply with the trade execution requirement under section 2(h)(8) of the CEA with respect to any CDS transaction that is entered into for the sole purpose of migrating CDS positions from ICEU to another CCP; or
– any person, including but not limited to any SEF, for failure to comply with required methods of execution under Commission regulation 37.9 with respect to any CDS transaction that is entered into for the sole purpose of migrating CDS positions from
ICEU to another CCP“.
The no-action relief is limited in time up to October 27, 2023 or up to the termination of business by ICEU. In no case shall it apply beyond January 1, 2024.