ABA Supports CFTC’s Proposed Swap Clearing Relief for BHCs, S&LHCs

In a comment letter to the Commodity Futures Trading Commission today, ABA offered support for a proposal 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 ABA in 2016.

Under the proposal, certain 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. ABA has advocated for this relief for years, and led the effort that resulted in the 2016 no-action letter.

In today’s comment letter, ABA urged the CFTC to also exempt from the swaps clearing requirement all banking entities — regardless of asset size — that are not required to register with the CFTC as swap dealers or major swap participants. ABA noted that “absent an exemption, they incur substantial costs in clearing their swaps,” adding that “these are funds that they could put to better use in meeting the credit needs of their customers.”