CFTC Simplifies Cross-Border Swap Regulations with No-Action Letter 25-42

CFTC Simplifies Cross-Border Swap Regulations with No-Action Letter 25-42

The CFTC has issued No-Action Letter 25-42 that simplifies the agency's fragmented framework for cross-border swap regulations -- with important implications for perpetual futures traders.

What Changed:

• Market participants can now apply the "U.S. person" and "guarantee" definitions from the 2020 cross-border rules across a broader range of swap requirements
• Relief is effective immediately with no filing required
• The relief is not time-limited and remains in effect until withdrawn or replaced
• Aligns CFTC definitions more closely with SEC approach

Why This Matters for Traders:
The letter affects not only traditional swap trading platforms but also platforms listing "perpetual futures" -- contracts widely considered "swaps" under CFTC regulations. Non-U.S. platforms that previously prohibited participation by "U.S. persons" may now become available to additional categories of market participants.

Operational Benefits:
Swap dealers and regulated entities can now streamline entity onboarding and monitoring. They may adopt the 2020 definitions without altering historical documentation or conducting re-certifications for existing counterparties.

This comes as the CFTC has also reached out to industry for comment on trading and clearing of "perpetual" style derivatives, signaling continued regulatory attention on this growing market segment.

Source: Sidley Austin LLP

-- Fi