Blake Moore: “I would now like to place the second half of the CFTC letter into the Record. No-Action Letter 13-22 contemplated the…”

“I would now like to place the second half of the CFTC letter into the Record. No-Action Letter 13-22 contemplated the use of multiple eligible treasury affiliates within a corporate family, but the Division agrees with market participants that the third condition does not accurately reflect this. The Division is accordingly amending the third condition to clarify that the restriction on related affiliates and eligible treasury affiliates from entering into swap transactions with financial entity affiliates does not preclude the circumstance where the financial entity affiliate is an eligible treasury affiliate. vii. The requirement for the payment obligations of the treasury affiliate to be guaranteed. Market participants expressed concern with respect to the fifth General Condition to the Swap Activity in No-Action Letter 13-22. The fifth condition states that the payment obligations of the eligible treasury affiliate on the exempted swap must be guaranteed by: (i) its non-financial parent; (ii) an entity that wholly-owns or is wholly-owned by its non-financial parent; or (iii) the related affiliates for which the swap hedges or mitigates commercial risk. Market participants have explained that corporate parents and structures may avail themselves of other types of support arrangements, such as keepwell agreements, letters of credit, or revolving credit facilities for example, which would not satisfy the requirements of No-Action Letter 13-22.…”