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.