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ARTICLE · 29 DECEMBER 2017

SEC Permanently Extends No-Action Relief Related To Custody Requirements

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The SEC Division of Investment Management (the "Division") granted no-action relief to any registered investment company that keeps assets in the custody of certain clearinghouses (Chicago Mercantile Exchange ("CME"), ICE Clear Credit LLC ("ICE"), and LCH Limited and LCH.Clearnet LLC (collectively, "LCH")) or any of their clearing members to meet margin requirements for certain swaps that are cleared by the clearinghouses.

United StatesFinance and Banking
Hogan Lovells Cadwalader
Hogan Lovells Cadwalader
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The SEC Division of Investment Management (the "Division") granted no-action relief to any registered investment company that keeps assets in the custody of certain clearinghouses (Chicago Mercantile Exchange ("CME"), ICE Clear Credit LLC ("ICE"), and LCH Limited and LCH.Clearnet LLC (collectively, "LCH")) or any of their clearing members to meet margin requirements for certain swaps that are cleared by the clearinghouses.

In three separate letters, the Division granted no-action relief from enforcement action under Investment Company Act Section 17(f). The Division previously determined to apply a flexible interpretation of custody requirements in line with Dodd-Frank's "underlying policy to facilitate the central clearing of swap transactions." In light of the CFTC adopting rules to implement a framework for the central clearing of swaps, the SEC has chosen to permanently extend no-action relief regarding the custody requirements.

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