CFTC Presents Analysis on Swap Dealer De Minimis Exception

At the November 05, 2018 CFTC Open Meeting, Chairman J. Christopher Giancarlo had asked the CFTC staff to continue their analysis of the range of matters raised in the June 2018 swap dealer de minimis exception notice of proposed rulemaking, which was adopted in November 2018 (collectively with proposed rule "2018 DM releases"). One of the specific requests was to conduct a study on possible alternative metrics for the calculation of the swap dealer de minimis threshold. As noted in the swap dealer definition, “a person who is deemed to be a swap dealer shall be deemed to be a swap dealer with respect to each swap it enters into, regardless of the category of the swap or the person’s activities in connection with the swap.” Therefore, the analysis compares the projected total activity (not just swaps counted in the relevant scenario) of all likely swap dealers to the 2018 DM releases baseline scenario totals. The analysis also compares the total activity remaining in each scenario (after exclusions) of all likely swap dealers to 2018 DM releases baseline scenario totals.

In May 2012, CFTC and SEC had jointly issued an adopting release further defining, among other things, the term “swap dealer” in CFTC regulation 1.3 and providing for a de minimis exception to the swap dealer registration requirements. The de minimis exception states that a person shall not be deemed to be a swap dealer unless its swap dealing activities exceed an USD 8 billion aggregate gross notional amount threshold.

Keywords: Americas, US, Banking, Securities, De Minimis Exception, Swap Dealers, CFTC