FIA Comments on Swap Dealer Definition

FIA and FIA PTG Urge CFTC to Retain Current De Minimis Level for Swap Dealer Definition

Washington, DC (Aug. 13) – FIA and the FIA Principal Traders Group (together, FIA) today urged the Commodity Futures Trading Commission (CFTC) to retain the current $8 billion de minimis threshold for swap dealer registration and to modify the calculation methodology to better align it with the goals of a well-regulated derivatives market. Among the modifications, FIA supports efforts to except exchange-traded and/or cleared swaps, financial hedging transactions, and non-deliverable forwards from the calculation of the threshold. FIA’s comments are contained in a detailed letter to a proposed rulemaking that was submitted to the CFTC today.

In short, today’s comment letter states that FIA:

• Supports the proposed $8 billion de minimis threshold for swap dealer registration purposes;
• Supports excepting swaps that are exchange-traded and/or cleared from de minimis calculations, without a notional backstop or haircut;
• Supports the exclusion of swaps entered into for the purpose of hedging financial positions from de minimis calculations, but believes the Commission should remove certain proposed conditions;
• Supports excepting non-deliverable forwards from de minimis calculations based on their equivalence to FX forwards, which have been exempted from such calculations; and,
• Supports a process to determine the methodology to calculate notional amount, but believes such determinations should be made by the Commission subject to public notice and an opportunity for comment.

“FIA supports the Commission’s effort in the proposal to provide clarity to the market on the swap dealer registration threshold,” said FIA Senior Vice President and General Counsel Allison Lurton. “We also appreciate the willingness to make necessary adjustments to Dodd-Frank rulemakings with the benefit of the passage of time and the collection of additional data.”

FIA is the leading global trade organization for the futures, options and centrally cleared derivatives markets, with offices in Brussels, London, Singapore and Washington, D.C. FIA’s membership includes clearing firms, exchanges, clearinghouses, trading firms and commodities specialists from more than 48 countries as well as technology vendors, lawyers and other professionals serving the industry. FIA’s mission is to support open, transparent and competitive markets, protect and enhance the integrity of the financial system, and promote high standards of professional conduct. As the principal members of derivatives clearinghouses worldwide, FIA’s member firms play a critical role in the reduction of systemic risk in global financial markets.

FIA PTG is an association of firms that trade their own capital on exchanges in futures, options and equities markets worldwide. FIA PTG members engage in manual, automated, and hybrid methods of trading, and they are active in a wide variety of asset classes, including equities, fixed income, foreign exchange and commodities. FIA PTG member firms serve as a criticial source of liquidity, allowing those who use the markets, including individual investors, to manage their risks and invest effectively. FIA PTG advocates for open access to markets, transparency and data-driven policy. For more information, contact fiaptgpr@fia.org.