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CFTC Proposes To Maintain Swap Dealer Registration De Minimis Exception at $8 Billion

The Commodity Futures Trading Commission is proposing various amendments to the de minimis exception from registration as a swap dealer. The de minimis exception provides that a person is not deemed to be a swap dealer unless its swap dealing activities exceed an aggregate gross notional amount of $8 billion measured over any 12-month period. However, the $8 billion amount is currently scheduled to decrease to $3 billion when the extended registration rule phase-in period ends on December 31, 2019. If the CFTC’s proposed amendments are adopted, the de minimis threshold will remain permanently at $8 billion.

The CFTC is also proposing to amend some other aspects of the rules for counting swaps against the de minimis threshold. The most significant of these amendments would expand the current exemptions from counting (1) swaps between an insured depository institution and a customer relating to a loan to the customer; and (2) swaps that hedge financial or physical positions. In addition, the proposal would grant to the CFTC’s Division of Swap Dealer and Intermediary Oversight the authority to determine the methodology to be used in calculating the notional amount for any group, category, type or class of swaps.

The CFTC also is seeking comment on various related proposals, including whether to add a minimum counterparty count or transaction count threshold, whether to except from consideration exchange-traded or cleared swaps, and whether to except from consideration non-deliverable forward transactions.

The CFTC’s proposal is available here.

©2019 Katten Muchin Rosenman LLP


About this Author

Guy Dempsey Jr., Bank Regulations Legal Specialist, Katten Muchin

Guy C. Dempsey Jr. concentrates his practice on derivatives and structured products and on bank regulation. He advises clients on derivatives transactions of all types across all asset classes, as well as on the corporate governance, regulatory, collateral, compliance, insolvency and litigation issues associated with such products.

Much of Guy’s work involves helping bank and non-bank clients analyze the details and impact of the Dodd-Frank Act. He maintains deep knowledge of the banking laws and regulations relating to capital markets activities....

James M. Brady, Katten Muchin Law Firm, Finance Attorney

James Brady concentrates his practice in financial services matters.

While in law school, James was an editor of the Michigan Journal of International Law. He also served as a judicial intern to the Honorable Stephen J. Markman of the Michigan Supreme Court. http://www.kattenlaw.com/James-Brady