Swap Market Rules: CFTC Open Commission Meeting

CFTC Public Meeting on Swap Market Rules

On 5th November 2018 by the U.S. Commodity Futures Trading Commission (CFTC) held an open commission public meeting with all five commissioners present. This was to consider rules of the swap markets, which includes the De Minimis Exception and changes to the SEF regulations. In addition, there was a request for comment on post-trade name give-up.


Final Rule: Amending the De Minimis Exception to the Swap Dealer Definition

The CFTC voted to amend the De Minimis Exception for swap dealers. The threshold will now be set at $8 billion, while it had previously been the case that this threshold would be dropped to $3 billion in 2019.  This had been a topic of debate and this move will prevent uncertainty for participants in the swap market. Indeed, the chairman of the CFTC, Chris Giancarlo stated that this decision would provide clarity on the issue and mean that there were less oppressive requirements for small and growing swap dealers. It will prevent participants in the market having to register as a dealer. In addition, the amendment would mean more service providers will be available for small and medium-sized firms. A study will be carried out to look at alternative ways that the threshold can be measured and this will provide the basis for any further discussion on the matter.


Proposed Rule: Amendments to Regulations on Swap Execution Facilities and the Trade Execution Requirement

Another rule proposed by the CFTC includes changes to the Swap Execution Facility (SEF) regulations. By a vote of 4-1, it was agreed for an expansion on permitted execution methods on swap execution facilities. While the are only two methods of executions allowed right now, this proposal would mean that the ‘made available for trade’ determination process would be removed and swap brokers and aggregators would be required to register as SEFS, as well as devise requirements for SEF trading specialists. This could include a code of conduct to be used and proficiency training conditions. Mr Giancarlo, one of the commissioners, said that there had been no innovation since the Dodd-Frank requirements, as well as hardly any new entrants to the marketplace. He claimed that his proposal would mean that SEFs could meet customer demand and have more adaptive trading methods. In addition, it would increase swaps trading onto SEFs.

The commissioner, Mr Berkovitz, who opposed this proposed rule argued that studies found the rules already in place increased competition between dealers, as well as reduced transaction costs that would benefit customers. In addition, he stated that the current proposal would mean that market participants could be discriminated against and would be against the swap trading requirements of G20. It will be open for comment for 75 days when it has been published in Federal Register.


Request for Comment regarding the Practice of “Post-Trade Name Give-Up” on Swap Execution Facilities

In addition, all five of the CFTC voted to issue a request for public comment on post-trade name give-up. The purpose of this would be to gather industry feedback on post-trade name give-up, which is when anonymous trades are later disclosed and lose their anonymity after the transaction. This may later lead to a recommendation.


The meeting was open to the public with seating on a first-come, first-served basis at CFTC Headquarters Lobby-Level Hearing Room 1155 21st Street, NW, Washington, DC 20581. The live webcast recording and agenda can be found here.

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