Featured Product

    CFTC Amends De Minimis Exception Within the Swap Dealer Definition

    November 13, 2018

    CFTC is amending the de minimis exception within the swap dealer definition in its regulations by setting the aggregate gross notional amount threshold for the de minimis exception at USD 8 billion in swap dealing activity entered into by a person over the preceding 12 months. The effective date for this rule is November 13, 2018.

    The de minimis exception states that a person shall not be deemed to be a swap dealer unless its swaps connected with swap dealing activities exceed an aggregate gross notional amount threshold of USD 3 billion (measured over the prior twelve-month period), subject to a phase-in period, during which the aggregate gross notional amount threshold is set at USD 8 billion. The phase-in period was originally scheduled to terminate on December 31, 2017 and the aggregate gross notional amount threshold was scheduled to decrease to USD 3 billion at that time. However, pursuant to paragraph (4)(ii)(C)(1) of the de minimis exception, CFTC issued two successive orders to set new termination dates; the phase-in period is currently scheduled to terminate on December 31, 2019.

    CFTC received 43 letters in response to the consultation on this rule. Meanwhile, CFTC staff participated in four ex parte meetings concerning the notice of proposed rulemaking published in June 2018. CFTC proposed to amend the de minimis exception by:

    • Setting the aggregate gross notional amount threshold for the de minimis exception at USD 8 billion in swap dealing activity entered into by a person over the preceding 12 months
    • Adding new factors to the de minimis exception that would lead to excepting from the aggregate gross notional amount calculation. These include certain swaps entered into with a customer by an insured depository institutions (IDI) in connection with originating a loan to that customer, certain swaps entered into to hedge financial or physical positions, and certain swaps resulting from multilateral portfolio compression exercises.
    • Providing that CFTC may determine the methodology to be used to calculate the notional amount for any group, category, type, or class of swaps and delegating to the Director of the Division of Swap Dealer and Intermediary Oversight, the authority to make such determinations

    In addition, CFTC sought comment on the following additional potential changes to the de minimis exception:

    • Adding as a factor a minimum dealing counterparty count threshold and/or a minimum dealing transaction count threshold
    • Adding as a factor whether a swap is exchange-traded and/or cleared
    • Adding as a factor whether a swap is categorized as a non-deliverable forward transaction

    In this adopting release, CFTC is amending the de minimis exception by setting the aggregate gross notional amount threshold at USD 8 billion in swap dealing activity. CFTC may in the future separately propose or adopt rules addressing any aspect of the proposed rule that is not finalized in this release.

     

    Related Link: Final Rule

    Effective Date: November 13, 2018

    Keywords: Americas, US, Banking, Securities, De Minimis Exception, Aggregate Gross Notional Amount Threshold, Swap Dealer, Swaps, CFTC

    Related Articles
    News

    EU Amends IFRS 9 Rule, Changes Concern Interest Rate Benchmark Reforms

    EU published Regulation 2020/34 regarding the International Accounting Standard (IAS) 39 and International Financial Reporting Standards (IFRS) 7 and 9.

    January 16, 2020 WebPage Regulatory News
    News

    FDIC and OCC Issue Statement on Heightened Cyber Security Risk

    In response to the heightened cyber-security risk facing the financial services industry and other critical business sectors, FDIC and OCC issued an interagency statement on heightened cyber-security risk.

    January 16, 2020 WebPage Regulatory News
    News

    BCRA Updates Regulation on Capital Requirements and Information Regime

    BCRA updated the rules on minimum capital requirements for financial entities and on certain aspects of the information transparency regime for quarterly and annual supervision.

    January 16, 2020 WebPage Regulatory News
    News

    BoE and FCA Outline Next Steps for LIBOR Transition in 2020

    BoE, FCA, and the Working Group on Sterling Risk-Free Reference Rates (RFRWG) have published a set of documents that outline the LIBOR transition priorities and milestones for 2020.

    January 16, 2020 WebPage Regulatory News
    News

    BIS to Expand Central Bank Membership

    BIS is to expand its central bank membership base and to increase collaboration in its work as a forum for international cooperation and as a hub for central banks and other financial authorities.

    January 14, 2020 WebPage Regulatory News
    News

    EIOPA Issues Technical Specifications for Market and Credit Risk Study

    EIOPA published the technical specifications, including instructions, for the market and credit risk modeling comparative study for year-end 2019.

    January 13, 2020 WebPage Regulatory News
    News

    FED Publishes FAQs on Tailoring Rules for Banks

    FED released a letter announcing the publication of an initial set of frequently asked questions (FAQs) in response to questions from institutions.

    January 13, 2020 WebPage Regulatory News
    News

    IA of Hong Kong Publishes Stress Testing Scenarios in Relation to ORSA

    IA of Hong Kong published the prescribed scenarios for stress and scenario testing to be used by the authorized insurers conducting general insurance business.

    January 13, 2020 WebPage Regulatory News
    News

    ISDA Paper Examines Legal Aspects of Smart Contracts Using Blockchain

    ISDA published a paper that discusses legal aspects of smart derivatives contracts that use the distributed ledger technology (DLT), which is also commonly known as the blockchain technology.

    January 13, 2020 WebPage Regulatory News
    News

    FDIC Letter on Submission of Call Reports by End of January 2020

    FDIC, in a letter to financial institutions, announced that the Consolidated Reports of Condition and Income (Call Reports) for the December 31, 2019 report date must be submitted to the Central Data Repository of the relevant US agencies by January 30, 2020.

    January 13, 2020 WebPage Regulatory News
    RESULTS 1 - 10 OF 4495