CFTC continues exemption of Australia’s Yieldbroker trading platform

The U.S. Commodity Futures Trading Commission’s (CFTC) Division of Market Oversight (DMO) today announced it has issued a no-action letter extending conditional time-limited relief for Australian-based trading platform Yieldbroker Pty Limited (Yieldbroker).

Yieldbroker is licensed as an exchange under an Australian Market License (AML) and is regulated by Australian Securities and Investment Commission (ASIC). Yieldbroker operates a multilateral trading platform in Australia which brings together multiple third-party buying and selling interests in swaps. Yieldbroker currently permits direct access to U.S. persons to transact in swaps on its platform.

This no-action letter will allow Yieldbroker additional time within which to comply with the terms of CFTC No-Action Letter, which is an enabling no-action letter for qualifying swaps trading platforms that are licensed in Australia and overseen by the Australian Securities & Investments Commission (ASIC) (Qualifying Australian Licensed Markets or QALMs).

The framework in Letter provides for long-term no-action relief from the requirement to register as a swap execution facility or designated contract market under section 5h(a)(1) of the Act and Commission Regulation 37.3(a)(1).

We have seen cases recently where the CFTC will exempt certain entities if the regulation of the home country is on par with U.S. based rules and requirements. Possibly permanent acceptance is on the way someday. The last exemption came in August, 2014.

DMO will not recommend that the Commission take enforcement action against Yieldbroker for failure to register as a swap execution facility under section 5h(a)(1) of the Commodity Exchange Act (Act) or Commission Regulation 37.3(a)(1), or against any market participants for use of, or other relationships with, Yieldbroker, for the period expiring May 15, 2016.

The no-action relief shall remain contingent on Yieldbroker’s satisfaction of six conditions specified in CFTC No-Action Letter No. 13-76 throughout the time-limited relief period. Additionally, Yieldbroker may offer trading in New Zealand Dollar-denominated interest rate swaps on its platform during the relief period. DMO continues to believe that predicating Yieldbroker’s relief upon satisfaction of these conditions will help foster pre- and post-trade transparency on, and impartial access to, Yieldbroker’s trading platform during the relief period.

To view the official release, click here.

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