The CFTC issued some breaks by laying out a series of Dodd Frank "No-Action" letters. The biggies:

CFTC issued a No-Action letter to prevent firms from crossing into Swaps Dealer status. The rule states that any firm doing more than $25 Million in business with “Special Entities” such as a Federal, State or Local utility is classified as a Swaps Dealer. The CFTC raised this level by 3200% to $800 Million. Yep. Black Swan. They really do exist.

We’ve already seen the problems that this rule had created. Liquidity for public utilities has evaporated because private utility XYZ and Merchant ABC don’t want to do business with them any more to prevent becoming a Swaps Dealer.

Transition from swaps to futures No-Action. As everyone is aware ICE rolled its swaps over to futures last weekend. Exactly when everyone (not a bank) is in the midst of sorting out whether they are Swaps Dealers or not. And, just when you think you have come up with your final number…poof… all your ICE trades are now futures and excluded from the calculation. Now under the No-Action letter everyone has until end of year to figure it out.

Yet to get No-Action status: Physical Transport and Storage. This is kind of a curve ball in my opinion. For example, is a natural gas transport contract a physical deal?  Is it a physical deal with embedded optionality? Or is it just a financial deal? If it’s a physical deal then where are the molecules? If it’s a physical deal with embedded optionality, then what part is physical and what part is option?  If it is a financial deal…well, I hate to be the bearer of bad news, but lots of companies represent the value of their transport as spreads or spread options.

I would argue this: It could be any of the above and a No-Action is appropriate to give the CFTC the time to figure it all out.

Here’s a link to the CFTC No-Action letters.