The Commodity Futures Trading Commission announced on 12 July 2024 that the Division of Market Oversight and the Division of Clearing and Risk have issued a no-action position regarding swap data reporting and recordkeeping regulations in response to a request from ForecastEx LLC, a designated contract market and derivatives clearing organization.
This no-action position ensures that the divisions will not recommend the Commission initiate an enforcement action against ForecastEx or its participants for specific swap-related recordkeeping requirements. Additionally, it covers failures to report data associated with binary option transactions executed on or subject to the rules of ForecastEx to swap data repositories.
The no-action letter applies only in narrowly defined circumstances and is consistent with similar no-action letters issued to other designated contract markets and derivatives clearing organizations. This approach reflects the CFTC’s commitment to providing regulatory relief while maintaining the integrity of market oversight.
No-action letters are vital tools within the regulatory framework, providing temporary relief from compliance with specific regulatory requirements under certain conditions. These letters are generally issued when compliance with the regulations would be unduly burdensome or impractical under specific circumstances, provided that the entity seeking relief demonstrates good faith efforts to comply with the overarching regulatory objectives.
In the case of ForecastEx LLC, the no-action letter pertains to specific swap-related recordkeeping and reporting obligations that may be technically challenging or overly burdensome to fulfill under current operational conditions. By issuing this no-action relief, the CFTC allows ForecastEx and its participants to continue their operations without the immediate threat of enforcement actions, provided they adhere to the stipulated conditions outlined in the letter.
The application of no-action letters is particularly significant for crypto-related companies, which often operate in rapidly evolving technological and regulatory environments. These companies may face unique challenges in complying with traditional financial regulations. No-action letters can provide temporary relief, allowing crypto firms to innovate and operate while they work towards full regulatory compliance. This fosters an environment where regulatory authorities and industry participants can collaborate to develop practical compliance solutions that support both innovation and regulatory integrity.
(Source: https://www.cftc.gov/PressRoom/PressReleases/8933-24)
