No-Action Relief Relating To The Inter-Affiliate Exemption Under Dodd-Frank

On March 6, 2014, the Commodity Futures Trading Commission ("CFTC") issued two no-action letters relating to the April 2013 inter-affiliate exemption from the clearing requirement (the "Inter-Affiliate Exemption").¹ Pursuant to the Inter-Affiliate Exemption, the clearing requirement generally will not apply to any swap for which either (i) the counterparties have a common majority-owning parent or (ii) one counterparty is a majority owner of the other ("Eligible Affiliate Counterparties"), provided that certain additional requirements are met.² One such requirement is that each Eligible Affiliate Counterparty, whether or not a U.S. person, clear all outward-facing swaps to which the clearing requirement applies³ ("Designated Swaps") or be eligible for an exception or exemption from clearing.⁴ Consequently, a non-U.S. Eligible Affiliate Counterparty that elects to use the Inter-Affiliate Exemption may be required to clear its outward-facing Designated Swaps with