Communications Regarding Swaps - Non-Special Entity Letter

Communications Regarding Swaps - Non-Special Entity Letter

The Commodity Futures Trading Commission (“CFTC”) has adopted rules governing business conduct standards for swap dealers and other parties.¹ These rules apply to communications regarding swaps,² including communications that occur prior to entering into a swap. The purpose of this letter is to inform you that Capital One, National Association (“CONA”)—as a registered swap dealer—seeks to engage in certain communications with counterparties, which are not deemed to be “special entities”³ pursuant to a “safe harbor” available under those rules.

To satisfy the conditions of the safe harbor for swap communications, CONA will be making certain disclosures and agreements to you and CONA will ask that you make certain representations and agreements by executing our documentation that is required in accordance with the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Supplement”). The Dodd-Frank Supplement will be provided to you as part of your onboarding materials and will specifically include:

  • Disclosure by CONA that it is acting in its capacity as a counterparty and not undertaking to assess the suitability of any swap for Customer.
  • Representations by Customer⁴ that:
    • It is not a “special entity;”
    • It has complied in good faith with written policies and procedures that are reasonably designed to ensure that the persons responsible for evaluating any “recommendation” (as such term is used in CFTC regulation 23.434) with respect to a swap provided by CONA and making trading decisions on behalf of Customer are capable of doing so; and
    • It is exercising independent judgment in evaluating the recommendations of CONA with regard to any swap.

Please note that CONA may need to significantly limit its communications regarding swaps if the conditions of the safe harbor, as described above and confirmed by CONA and you by executing a Dodd-Frank Supplement prior to execution of a swap, are not satisfied.

Should you have any questions regarding the “safe harbor” or the disclosures and representations described herein, please contact your CONA marketer.