General highlights of NAL 25-42

• Unified definitions of “US person” and “guarantee” – The CFTC’s Market Participants Division, Division of Clearing and Risk, and Division of Market Oversight will not recommend enforcement action when market participants classify counterparties using the “US person” and “guarantee” definitions in the 2020 Cross-Border Rule¹, even if competing definitions exist under prior 2013 Guidance² or the Cross-Border Uncleared Margin Rule³.
• Backward reliance on prior representations permitted – For regulatory requirements covered by the 2020 Cross-Border Rule (the “Group B” and “Group C” requirements), counterparties who made classifications and representations under the 2013 Guidance or the Cross-Border Uncleared Margin Rule before November 13, 2020 are still considered valid — even beyond the December 31, 2027 expiration limit originally established by the 2020 Cross-Border Rule.
• Conduit affiliate analysis not relevant – Determination of whether a non-US person counterparty qualifies as a “conduit affiliate,” as such term was interpreted in the 2013 Guidance, is not necessary.
• Supersession of conflicting No-Action Letters – This new NAL supersedes earlier staff letters to the extent they relied on definitions or frameworks inconsistent with this harmonized approach.

Why this matters to market participants

• Eliminates cross-definition confusion – Entities have historically struggled with three competing definitions of “US person” and “guarantee,” depending on which cross-border regime applied. This NAL rationalizes the treatment, reducing inconsistent application and uncertainty.
• Extended reliance period – While the 2020 Cross-Border Rule originally sunset cross-reliance post-December 2027, the CFTC now pledges not to enforce based on old classifications for legacy counterparties past that date, easing compliance burdens.
• Harmonization with SEC standards – The 2020 definition aligns more closely with the SEC’s approach, enhancing regulatory coherence across US markets. This NAL helps avoid re-determination of US person status solely due to definitional mismatch.
• Operational simplification – Swap dealers and other 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.
• Enforcement protection assurance – By formally committing not to use evolution in definitions as a basis for enforcement, the CFTC gives participants confidence in their compliance posture — even in evolving rule landscapes.

Key takeaways