8. CFTC issues report focuses on swap dealer de minimis exception for on-venue and cleared swaps - 08 July 2019

The report defines “on-venue swaps’ as those executed on an exchange, swap execution facility, or designated contract market. The data used for this report by the CFTC was collected using a “swap-dealer” to be defined as a person who is deemed to be a swap dealer shall be deemed to be a swap dealer with respect to each swap it enters into, regardless of the category of the swap or the person’s activities in connection with the swap.

The previous de minimis exception set by the CFTC and SEC said that a person shall not be deemed a swap dealer unless it’s swap dealing activities exceed an $8 billion aggregate gross notional amount threshold. This newly issued report excludes exchange-traded and cleared swaps from the de minimis calculation. This supports a clearer and more streamlined application of the de minimis exception. It has numerous charts that estimate the number of registered swap-dealers that would drop out of registration under various exclusion scenarios. However, there are few explicit conclusions to accompany the wide range of data displayed in the report.

Commissioner Brian Quintenz issued an accompanying statement that gives his views on the significance of the report: “First, the report shows that the removal of exchange-traded and cleared swaps from the de minimis calculation would result in no reduction of regulatory coverage. Second, the report highlights once again the glaring deficiencies of using notional value as the registration threshold triggering swap dealer registration.”

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