House Passes Derivatives Clearing Relief for Small Banks

The full House yesterday passed a spending bill that includes a provision granting an exemption from derivatives clearing requirements for small bank holding companies. The bill, which reauthorizes the Commodity Futures Trading Commission, provides a fix for a technical error in the Dodd-Frank Act that exempted depository institutions with under $10 billion in assets from derivatives clearing requirements but not their holding companies.

Banks that use swaps — for example, to hedge interest rate risk — often do so at the holding company level, and 94 percent of banks with under $10 billion in assets that use swaps have a holding company. For more information, contact ABA’s Ed Elfmann.