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DeMinimis Threshold

Pursuant to the Dodd-Frank Act’s requirement that the CFTC and SEC exempt from swap dealer registration any entity “that engages in a de minimis quantity” of dealing “in connection with transactions with or on behalf of customers,” the CFTC and SEC issued joint final rules that do not require an entity to register as a dealer if it does not exceed $8 billion or less of swap dealing activity over a rolling 12-month period. The threshold is scheduled to be lowered to $3 billion in December 2017, although the CFTC may end the phase-in period earlier by order or proposed rule, subject to public comment, to modify the de minimis threshold.  In addition, the CFTC provided a $25 million threshold for an entity's dealing activity with counterparties that are “special entities,” which include certain federal and state agencies, political subdivisions of states, and certain of their agencies, instrumentalities and pension plans.

In September 2014, the CFTC adopted a rule amendment so that when calculating an entity’s dealing activity for purposes of determining whether the entity’s dealing activity with special entities is below the $25 million de minimis threshold, an entity may exclude its utility operations-related swaps (as defined) with “utility special entities.” 

Learn more about resources for banks focused on the derivatives markets.

Questions? Please contact Ananda Radhakrishnan for more information.