October 21, 2021

Volume XI, Number 294

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CFTC Small Business Rule and Brexit Provisions

CFTC Adopts Final Rule to Help Small Businesses and Job Creators in the US

On March 25, the Commodity Futures Trading Commission adopted an amendment to the definition of a swap dealer found in CFTC Rule 1.3 to allow certain insured depository institutions (IDIs) to provide risk mitigating swaps to customers in connection with the origination of loans without counting the swaps towards their de minimis threshold. Under CFTC Rule 1.3, an entity that would otherwise be required to be registered as a swap dealer is exempt from registration if the swaps the entity enters into over the course of the immediately preceding 12 months have an aggregate gross notional amount of no more than $8 billion. The amendment provides that, in calculating its aggregate gross notional amount, an IDI may exclude swaps entered into with a customer in connection with originating a loan to that customer, subject to the terms and conditions set out in the amendment.

The Rule is available here.

CFTC Passes Provision to Provide Greater Brexit-Related Market Certainty by Unanimous Vote

On May 25, the Commodity Futures Trading Commission adopted an interim final rule designed to provide greater certainty to the global marketplace in the event of a “no-deal Brexit.”

In the event that the UK leaves the EU without a negotiated withdrawal agreement, affected swap dealers and major swap participants may be required to transfer certain uncleared swaps that were entered into before the relevant compliance dates under the CFTC Margin Rule or Prudential Margin Rule. The interim final rule is designed to allow an uncleared swap to retain its legacy status under the CFTC Margin Rule or Prudential Margin Rule when so transferred.

Comments to the interim final rule must be submitted within 60 days of publication in the Federal Register.

The interim final rule is available here.

©2021 Katten Muchin Rosenman LLPNational Law Review, Volume IX, Number 89
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About this Author

Kevin M. Foley, Finance Lawyer, Katten Llaw Firm
Partner

Kevin M. Foley has extensive experience in commodities law and advises a wide range of clients, both in the United States and abroad, on compliance with the Commodity Exchange Act and the rules of the Commodity Futures Trading Commission (CFTC) affecting traditional exchange-traded products, as well as the over-the-counter markets involving swaps and other derivative instruments. His clients include futures commission merchants, derivatives clearing organizations, designated contract markets, foreign boards of trade and an industry trade association.

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312-902-5372
Associate

Leonard Licht is an associate in the Financial Services practice. He advises a broad range of financial market participants, including investment managers to private funds and investors in private funds. Prior to joining Katten, Lenny practiced as a corporate and securities attorney and has also worked in an analytical capacity with a family office.

While in law school, Lenny was a Heyman scholar and member of the Moot Court Honor Society.

212-940-6587
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