CFTC Finalizes ABA-Advocated Relief on Swap Clearing for BHCs, S&LHCs

The Commodity Futures Trading Commission today finalized a rule that exempts from clearing requirements certain swaps entered into by financial holding companies with less than $10 billion in assets. The rule formalizes 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 final rule, 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, central banks, sovereign entities and certain international development banks, would be exempt from clearing requirements.

The final rule aligns the regulatory treatment for these institutions with that of banks, thrifts, Farm Credit institutions and credit unions. The final rule reflects years of ABA advocacy—emphasizing that many banks enter into swaps for risk management purposes exclusively at the holding company level—from the push for the 2016 no-action letter to comments incorporated in the final rule.