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Alternative Market Briefing

CFTC to exempt certain firms from clearing requirement for swaps

Monday, August 27, 2018

Laxman Pai, Opalesque Asia:

The Commodity Futures Trading Commission (CFTC) proposed a rule to exempt the clearing of swaps from financial holding companies with consolidated assets less than $10bn.

A press release from CFTC said that it has unanimously approved a swap clearing requirement proposed rule that would reduce unnecessary burdens on bank holding companies, savings and loan holding companies, and community development financial institutions.

"The proposal would exempt from the clearing requirement swaps entered into by bank holding companies and savings and loan holding companies with consolidated assets of $10bn or less, and community development financial institutions that meet certain conditions," it said.

The proposed amendments would codify no-action relief that the division of clearing and risk (DCR) had granted these institutions in 2016.

The proposal aligns the regulatory treatment for these institutions with that of banks, thrifts, farm credit institutions and credit unions. Many banks enter into swaps for risk management purposes exclusively at the holding company level.

The release said that this proposal is a direct result of CFTC chairman J. Christopher Giancarlo's agency-wide Project KISS (which stands for "Keep It Simple, Stupid,") initiative, which asked for recommendations from the public to make existing CFTC regulations simpler, less burdensome and less costly.

Project KISS also included a review all CFTC rules to re......................

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