On August 15, the Commodity Futures Trading Commission’s Division of Swap Dealer and Intermediary Oversight (Division) published the Swap Dealer De Minimis Exception Final Staff Report, which summarizes industry comments and data related to the scheduled change to the de minimis exception under the CFTC rules defining “swap dealer.” A related preliminary report analyzed swap data and policy considerations to assess the current de minimis threshold and potential alternatives. (For a more complete discussion of the preliminary report, see the November 20, 2015 edition of the Corporate & Financial Weekly Digest.) The current threshold of $8 billion will decrease to $3 billion after December 31, 2017, unless the CFTC sets a different date or modifies the de minimis exception.
The Division made no recommendations regarding the de minimis exception but presented several alternatives for the CFTC’s consideration: (1) setting a higher or lower notional de minimis threshold; (2) excluding from an entity’s de minimis calculation swaps that are traded on a registered or exempted swap execution facility or on a designated contract market and/or cleared; (3) adopting a multi-factor approach that would potentially include counterparty count and/or transaction count metrics in the de minimis exception, in addition to a gross notional dealing threshold; and (4) setting a notional de minimis threshold specific to each asset class.
The final report is available here.