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On December 21, 2025, the CFTC's Market Participants Division ("MPD") issued a no‑action letter that could materially expand hedging options for commercial energy companies by allowing firms to exclude certain "Energy Commodity End‑User Swaps" from the swap dealer de minimis calculation during a pilot period, subject to conditions. This temporary relief is designed to gather market data while potentially lowering hedging costs and expanding counterparty capacity for end‑users in the power, oil, and natural gas sectors. (CFTC Staff No-Action Letter No. 25-51 (MPD), Dec. 19, 2025).1
Background
The Dodd‑Frank Act added the "swap dealer" category to the Commodity Exchange Act ("CEA") in 2010 to bring over‑the‑counter derivatives under a comprehensive regulatory framework. Entities that hold themselves out as dealers in swaps, make a market in swaps, or regularly enter into swaps in the ordinary course of business for their own account may be required to register as swap dealers unless their dealing activity is below a de minimis threshold. Once above the threshold, swap dealers must register with the CFTC and the National Futures Association ("NFA") and comply with extensive requirements, including business conduct standards with counterparties, swap data reporting and recordkeeping, risk management, chief compliance officer oversight and annual reporting, capital and margin requirements for uncleared swaps (for non‑bank swap dealers ("SDs")), and other compliance obligations. Practically, these obligations are resource‑intensive, which is why many commercial firms seek to remain below the de minimis threshold and limit "dealing" activity.2
Why this matters now
The swap dealer de minimis threshold is currently set at $8 billion in aggregate gross notional amount ("AGNA") over the prior 12 months, including affiliates under common control. If a company's dealing activity exceeds that threshold, it must register as a swap dealer, triggering extensive compliance obligations. Excluding qualifying end‑user energy swaps from that AGNA calculation could keep more commercial firms below the threshold and increase the number of available counterparties for hedging.3
MPD's action responds to industry concerns that AGNA is a poor fit for non‑financial commodity markets because commodity price volatility can inflate notional amounts without reflecting any real change in market risk or dealing significance. The CFTC has previously recognized that a too‑low de minimis threshold can reduce the number of counterparties, harm liquidity, and increase volatility and systemic risk—effects that are especially acute for end‑users hedging physical energy exposures.4
What the no‑action letter does
- MPD will not recommend enforcement if a firm (including affiliates under common control) excludes qualifying "Energy Commodity End‑User Swaps" from its swap dealer de minimis calculations, provided the firm meets specific notice, recordkeeping, and short‑term reporting conditions during a pilot period. This position lasts until the CFTC adopts a rulemaking or guidance addressing the treatment of these swaps.5
- The relief aims to test whether excluding these swaps increases hedging opportunities for commercial energy end‑users and ultimately lowers energy costs, with MPD collecting targeted data to inform any future CFTC action.6
What qualifies as an "Energy Commodity End‑User Swap"
A swap qualifies for this relief if the counterparty is: (1) not a "financial entity" under CEA section 2(h)(7)(C)(i); and (2) a producer, processor, commercial user, or merchant handling the relevant energy commodity (or its products/by‑products), entering the swap solely for purposes related to its business as such. In short, these are commercial end‑user energy swaps used for business purposes, not financial entity swaps.7
Conditions to rely on the relief
To exclude qualifying swaps from de minimis calculations, a "Covered Person" must satisfy three conditions:
- Maintain records for these swaps consistent with CFTC Regulation 45.2, including evidence that each condition of the no‑action letter is met.8
- Before relying, file a notice of intent with MPD (MPDLetters@CFTC.gov) identifying the entity's full legal name and Legal Entity Identifier ("LEI").9
- For the three months starting with the month after filing the notice, submit a monthly report to MPD by the 10th day of the following month, providing the Annex A data: aggregate notional value and number of counterparties by Derivatives Service Bureau Limited ("DSBL") commodity sub‑category, as of month‑end.10
Affiliates under common control are included in the relief and must be considered when applying the conditions and calculating any remaining de minimis activity.11
Practical guidance for power, oil, and natural gas companies
First, confirm if your company and your counterparties fit the end‑user profile. You can only exclude swaps where your counterparty is a non‑financial entity and is entering the swap as a producer, processor, commercial user, or merchant handling the commodity (or its derivatives) for business purposes. Contracts must align with business hedging or commercial risk management objectives.12
Second, consider whether it makes sense to make use of the no-action relief. Before excluding swaps, file the notice to MPD with your legal name and LEI, and build the recordkeeping required by Regulation 45.2 to demonstrate eligibility and compliance, including classification of swaps by DSBL sub‑category for Annex A reporting. Establish controls to capture counterparty type, business purpose attestations, and affiliate aggregation.13
Third, calendar the pilot reporting. Submit Annex A data for three consecutive months starting the month after your notice, by the 10th business day of the following month. Ensure your systems can aggregate notional amounts and count counterparties by DSBL sub‑category as of each month‑end.14
Fourth, revisit your de minimis tracking and counterparty strategy. With qualifying swaps excluded, many merchant energy firms, producers, midstream operators, and utilities may regain capacity to face additional non‑financial end‑users without breaching the $8 billion threshold, potentially broadening hedging access and improving pricing. Continue monitoring remaining dealing activity for non‑qualifying swaps, including with financial entities.15
Key takeaways
This no‑action relief provides a near‑term pathway to expand hedging opportunities for commercial energy end‑users by excluding certain qualifying swaps from de minimis calculations, conditioned on straightforward notice, recordkeeping, and short‑term reporting. To take advantage of the pilot, companies should promptly assess eligibility, file the notice if appropriate, implement Annex A reporting, and update internal de minimis and counterparty‑onboarding controls.16
Footnotes
1. 17 C.F.R. § 140.99.
2. 7 U.S.C. § 1a(49); Further Definition of "Swap Dealer," 77 Fed. Reg. 30,596 (May 23, 2012); 17 C.F.R. § 1.3 (definition of "swap dealer"); De Minimis Exception, 83 Fed. Reg. 56,666 (Nov. 13, 2018); 17 C.F.R. pt. 3 (registration/NFA membership) & § 3.3 (CCO); 17 C.F.R. pts. 43 & 45 (reporting); 17 C.F.R. §§ 23.201, 23.600 (recordkeeping/risk management); 17 C.F.R. subpt. H to pt. 23 (external business conduct); 17 C.F.R. §§ 23.100–23.161 (capital and margin for non‑bank SDs).
3. 17 C.F.R. § 1.3, definition of "swap dealer," subpara. (4)(i)(A); De Minimis Exception to the Swap Dealer Definition, 83 Fed. Reg. 56,666 (Nov. 13, 2018).
4. 83 Fed. Reg. at 56,671–75.
5. CFTC Staff No-Action Letter No. 25-51, at III & IV.
6. CFTC Staff No-Action Letter No. 25-51, at III.
7. 7 U.S.C. § 2(h)(7)(C)(i); cf. 17 C.F.R. § 32.3(a)(2).
8. 17 C.F.R. § 45.2; CFTC Staff No-Action Letter No. 25-51, Condition (1).
9. CFTC Staff No-Action Letter No. 25-51, Condition (2).
10. CFTC Staff No-Action Letter No. 25-51, Condition (3) & Annex A; see also 17 C.F.R. § 45.7 (UPI/DSB).
11. 17 C.F.R. § 1.3, definition of "swap dealer," subpara. (4)(i)(A); CFTC Staff No-Action Letter No. 25-51, at IV.
12. CFTC Staff No-Action Letter No. 25-51, at III–IV.
13. 17 C.F.R. §§ 45.2, 45.7; CFTC Staff No-Action Letter No. 25-51, Annex A.
14. CFTC Staff No-Action Letter No. 25-51, Condition (3) & Annex A; 17 C.F.R. § 45.7.
15. 83 Fed. Reg. 56,666; 17 C.F.R. § 1.3.
16. CFTC Staff No-Action Letter No. 25-51, Conditions (1)-(3).
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
