As has been rumored in recent weeks, the CFTC has adopted an order establishing December 31, 2018 as the swap dealer registration de minimis threshold phase-in termination date. With this approval, the de minimis threshold will remain at $8 billion until December 31, 2018 instead of changing to $3 billion on December 31, 2017.
CFTC Chairman Timothy Massad noted:
“There are now more than 100 swap dealers provisionally registered with the CFTC, which include most of the largest global banking entities. Absent our action today, the threshold would have dropped from $8 billion to $3 billion at the end of 2017. That means firms would have been required to start determining whether their activity exceeds that lower threshold just a few months from now – in January of next year. Pushing back this date is a sensible and responsible step for several reasons.
First, our staff has completed the study required by the rule on the threshold. They estimated that lowering the threshold would not increase significantly the percentage of interest rate swaps (IRS) and credit default swaps (CDS) covered by swap dealer regulation, but it would require many additional firms to register. This might include some smaller banks whose swap activity is related to their commercial lending business. At the same time, the study notes that the data has certain shortcomings, particularly when it comes to nonfinancial commodity swaps. This market is very different than the IRS and CDS markets, and I know there is much concern about the threshold with respect to it. This delay will allow us to consider all these issues further.”