On March 20, 2020, the Commodity Futures Trading Commission (CFTC) issued a third wave of relief to market participants in the wake of the COVID-19 (coronavirus) pandemic.
In this current wave of relief, the CFTC included two no-action letters, which provided “temporary, targeted relief to a large U.S. bank that helps finance America’s oil and gas sector and to those who operate commodity-focused investment funds the CFTC regulates.” In the press release regarding this wave of relief, the CFTC Chairman Heath P. Tarbert acknowledged that end users involved in the energy market are facing unique challenges and that the CFTC is committed to providing targeted relief in order to help companies weather the volatile market conditions.
Chairman Tarbert also noted that the CFTC is “taking additional steps to provide flexibility for investment funds by granting temporary relief from certain reporting requirements that have become challenging to meet under the present circumstances.”
In particular, the CFTC’s first no-action letter provides temporary relief to an insured depository institution by permitting it to remove certain energy-related commodity swaps when determining whether the institution must register with the CFTC as a major swap participant. And the second no-action letter grants temporary relief generally to commodity pool operators from certain reporting requirements.
This third wave relief comes on the heels of the CFTC’s first two waves of no-action letters, in which the CFTC granted temporary relief to, among others, futures commission merchants, introducing brokers, swap dealers, retail foreign exchange dealers, floor brokers, swap execution facilities, and certain designated contract markets.
Chairman Tarbert has consistently emphasized in all three waves of no-action letters that he encourages market participants to engage early and often with the CFTC as market conditions continue to develop. Given the specificity of the individual no-action relief provided to one institution in this wave, other market participants who are similarly situated may be able to approach the CFTC for like relief.