Smaller Swaps Firms Get Year Reprieve From Registration

By Richard Hill

Oct. 13 — Small and mid-size swap market participants will now have at least an extra year before possibly having to register with the Commodity Futures Trading Commission as dealers.

The commission, acting unanimously Oct. 13, extended until Dec. 31, 2018, the deadline after which swaps entities that have between $3 billion and $8 billion in annual dealing activity might be subject to additional agency oversight.

Currently, entities that have less than $8 billion in annual swap-dealing activity aren't required to register as dealers—a reprieve that was scheduled to end at the end of 2017. At that time, the trigger for having to register was scheduled to drop to $3 billion in annual dealing activity—meaning any entity over that limit would have had to register by January 2018. Under the December 2017 deadline, firms would have had to begin tracking their dealing activity by January to see whether they passed the $8 billion threshold.

The agency said it acted to give staff more time to consider what the threshold for registration should be, and to give market participants extra regulatory certainty. The commission now has until the end of 2018 to keep the threshold at $8 billion, or lower or raise it.

The delay is a win for smaller and mid-sized swaps entities that would prefer not to register and be subject to capital, margin, disclosure, recordkeeping and other requirements. Those entities include smaller banks that use swaps as part of their commercial lending business.

Dealer Changes

CFTC staff reported in August that if the threshold were lowered to $3 billion, approximately 84 additional entities would have to register. Raising the level to $15 billion would eliminate about 34 registrants, according to staff. There are currently about 100 registered swaps dealers.

Chairman Timothy Massad, who signaled the date change in September, said the move will allow the CFTC to better study the impact of a $3 billion activity threshold on smaller commercial lenders, and to acquire better data for setting the proper threshold.

Massad also said he wants the CFTC to adopt a rule setting capital requirements for swap dealers before making a final decision on an activity threshold. Such a rule, which first was proposed in 2011 but later shelved, should be reproposed soon, he said in an Oct. 13 statement. The commission will try to harmonize the new proposal with rules already adopted by banking regulators, the chairman recently told Bloomberg BNA.

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To contact the editor responsible for this story: Phyllis Diamond at

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