The Commodity Futures Trading Commission’s
(CFTC) new proposal to amend the de minimis exception
in the swap dealer definition of its regulations, has brought
welcome clarity for the industry.
The regulator keeps the aggregate gross notional threshold
at $8 billion, a move anticipated by the industry, despite the
commission’s original intention to eventually
sunset the number to $3 billion.
When the CFTC first adopted these rules in 2012, it wrote
the sunset caveat into the regulation that would automatically
drop the threshold to $3 billion at the end of 2017. They gave
one year of reprieve, and recently extended that until
Gabriel Rosenberg, partner at Davis Polk, said the decrease
to $3 billion would capture very little in the way of
derivatives activity. However, it would take a number of
regional banks and institutions that are not in the swaps
dealing business, but for one reason or...