CFTC Formalizes Swap Clearing Relief for BHCs, S&LHCs

The Commodity Futures Trading Commission today proposed a rule that would exempt from clearing requirements certain swaps entered into by financial holding companies with less than $10 billion in assets. The rule would formalize relief for bank holding companies and savings and loan holding companies provided via a CFTC staff no-action letter to the American Bankers Association in 2016.

Under the proposal, the swaps of BHCs and S&LHCs with less than $10 billion in assets, as well as community development financial institutions that meet certain conditions, would be exempt from clearing requirements. The proposal aligns the regulatory treatment for these institutions with that of banks, thrifts, Farm Credit institutions and credit unions. Many banks enter into swaps for risk management purposes exclusively at the holding company level.

ABA has advocated for this relief for years, leading the effort that resulted in the 2016 no-action letter. Comments on the proposal are due 60 days after it is published in the Federal Register.