CFTC Permanently Sets Swap Dealer De Minimis Threshold at $8B

The Commodity Futures Trading Commission voted today to maintain the swap dealer de minimis threshold at $8 billion on a permanent basis. The threshold had been scheduled to drop to $3 billion at the end of 2019. The CFTC voted to approve the new threshold on a bipartisan basis.

Given the uncertainty surrounding the de minimis threshold in recent years, many banks have been managing swaps activity with the expectation that it would eventually revert to $3 billion in the aggregate gross notional amount of swap dealing activity over the previous 12 months. By making the $8 billion threshold permanent — which the American Bankers Associated has long called for — banks will be better positioned to serve their customers, providing more commercial end users with access to the swaps market so that they can manage risk responsibly. According to research commissioned by ABA, keeping the threshold at $8 billion will have a minuscule effect on the total amount of swaps activity covered by the registration requirement.

“For years, ABA has worked with the CFTC to help ensure the swap dealer registration threshold doesn’t pose significant compliance burdens and costs on banks that pose no systemic risk,” said ABA President and CEO Rob Nichols. “Today’s action will allow those institutions to better serve their customers, and we look forward to working with the CFTC on additional enhancements to the financial markets going forward.”