CFTC Staff Issues Interpretation on Legacy Swap Status

WASHINGTON — The Commodity Futures Trading Commission’s Market Participants Division and Division of Clearing and Risk today issued an interpretive letter addressing the effect of a merger conducted as part of an internal reorganization at Morgan Stanley, a CFTC-registered swap dealer, on the status of legacy swaps.

Based on the facts and circumstances of the merger as described in the letter, the divisions concluded the swaps at issue retain their legacy swap status under the Commission’s uncleared swap margin and swap clearing requirements.

MPD staff specifically determined Morgan Stanley’s legacy swaps retain their status as legacy swaps for any counterparties subject to the CFTC’s uncleared swap margin requirements and, thus, remain exempt from them.

DCR staff specifically determined the merger will not cause Morgan Stanley’s legacy swaps to lose their legacy status with respect to the CFTC’s swap clearing requirement.