CFTC to retain current de minimis level for swap dealer definition

CFTC offices

FIA and the FIA Principal Traders Group (together, FIA) have announced that they have urged the Commodity Futures Trading Commission (CFTC) to retain the current $8 billion de minimis threshold for swap dealer registration and to modify the calculation methodology to better align it with the goals of a well-regulated derivatives market. Among the modifications, FIA supports efforts to except exchange-traded and/or cleared swaps, financial hedging transactions, and non-deliverable forwards from the calculation of the threshold. FIA’s comments are contained in a detailed letter to a proposed rulemaking that was submitted to the CFTC today.

In short, today’s comment letter states that FIA:

  • Supports the proposed $8 billion de minimis threshold for swap dealer registration purposes;
  • Supports excepting swaps that are exchange-traded and/or cleared from de minimis calculations, without a notional backstop or haircut;
  • Supports the exclusion of swaps entered into for the purpose of hedging financial positions from de minimis calculations, but believes the Commission should remove certain proposed conditions;
  • Supports excepting non-deliverable forwards from de minimis calculations based on their equivalence to FX forwards, which have been exempted from such calculations; and,
  • Supports a process to determine the methodology to calculate notional amount, but believes such determinations should be made by the Commission subject to public notice and an opportunity for comment.

FIA supports the Commission’s effort in the proposal to provide clarity to the market on the swap dealer registration threshold,” said FIA Senior Vice President and General Counsel Allison Lurton. “We also appreciate the willingness to make necessary adjustments to Dodd-Frank rulemakings with the benefit of the passage of time and the collection of additional data.

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