On September 10, Commodity Futures Trading Commission staff issued a set of responses to frequently asked questions (FAQs) related to the timing of the swap dealer registration requirements. The staff guidance also clarifies certain aspects of the de minimis exemption from swap dealer registration.
Pursuant to CFTC Regulation 1.33(ggg)(4)(i), a market participant must register as a swap dealer within two months after the end of the month in which the participant has entered into swap positions that exceed certain de minimis thresholds. The de minimis thresholds are applied based on the aggregate gross notional amount of the swaps a market participant has entered into over the prior 12 months. During a preliminary phase-in period, which will last a maximum of five years, the de minimis threshold applicable will be $8 billion. Following the phase-in period, the threshold will be reduced to $3 billion. In addition, a person relying on the de minimis exemption may not enter into swaps with “special entities” whose gross notional value over the prior 12 months exceeds $25 million.
The CFTC staff clarified that only swaps entered into after the effective date of the swap definition (i.e., October 12) count toward the de minimis threshold threshold. For example, a market participant that is not registered as a swap dealer that enters $8 billion worth of swaps on October 13 may apply for registration as a swap dealer as early as October 13, but would not be required to register until December 31.
The FAQs are available here.