The Commodity Futures Trading Commission (CFTC) 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 USD10 billion or less, and community development financial institutions that meet certain conditions. The proposed rule is consistent with a 2016 staff no-action letter that provides relief from the clearing requirement swaps entered into by bank holding companies and savings and loan holding companies with consolidated assets of USD10 billion or less. The proposal is also consistent with a 2016 staff no-action letter that provides relief from the clearing requirement swaps entered into by community development financial institutions that are certified by the U.S. Department of Treasury, provided that such institutions only engage in swaps within specific product classes and meet certain other limitations related to the number of swaps executed per year and an aggregate notional value cap. The clearing requirement regulations are found in Part 50 of CFTC’s regulations. 


This proposal is a direct result of CFTC Chairman J Christopher Giancarlo’s (pictured) agency-wide Project KISS 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 reduce regulatory burdens and costs for participants in the markets the agency oversee.  


“This proposal would accomplish Project KISS goals by providing regulatory certainty and reduce the costs associated with the clearing requirement for these important end-users,” says Brian Bussey, Director of the Division of Clearing and Risk. 


The deadline for submission of comments is 60 days after the proposals are published in the Federal Register.