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Banks as End-Users

Banks of varying sizes are often end-users in derivatives transactions, using derivatives to hedge or mitigate risk the same way other commercial end-users do. For example, banks use derivatives to manage the interest rate risk when they create fixed rate-loans and provide long-term financing to their customers.

​ABA's Position

ABA believes that derivatives regulations should be tailored in way that takes into account a wide array of factors, including business model, complexity of operations, existing regulatory regimes for banks, and the risk derivative transactions pose to the safety and soundness of particular entities and the broader financial system.  ABA is committed to advocating for derivatives regulations that permit banks to serve their customers and communities. 

Recent News

​On January 8, 2016, the CFTC granted the ABA’s no-action letter request to ensure that holding companies can enter into swaps and benefit from the same end-user treatment as the small banks and savings associations they own. This helps mitigate the impact of a drafting error in Dodd-Frank, which could have prevented holding companies to community banks from using interest rate swaps to hedge their risk unless they undertook the cost prohibitive step of clearing those swaps. This relief assists hundreds of community bank holding companies that are currently hedging with swaps and may have been unable to renew these contracts. It gives many more community banks an important tool to manage interest rate risk going forward.

​On June 9, 2015, the House voted to reauthorize the Commodity Exchange Act (CEA) by a vote of 246-171. Section 316 of the House bill would amend the CEA to extend clearing relief to small bank holding companies. Current law permits the CFTC to exempt banks with under $10 billion in assets from clearing, but makes no mention of exempting their bank holding companies.

In a July 2012 final rule, the CFTC exempted banks with under $10 billion in assets from clearing, but made no mention of exempting their holding companies. Section 316 would extend clearing relief to small bank holding companies that own banks the CFTC has exempted. ABA has met with CFTC Commissioners and staff on this issue and advocated for a fix to this Dodd-Frank technical error.  We will continue to advocate for Section 316’s inclusion in any final bill.

If this is an issue that you are interested in following, please contact Shaun Kern or Ed Elfmann.​​​​

No Action Relief Letters




 Comment Letters


​Questions? Contact Shaun Kern for more information.


 ABA Staff Contacts


 Center for Bank Derivatives Policy

ABA's Center for Bank Derivatives Policy is a resource for banks focused on the derivatives markets. It provides tools to navigate a range of regulations and to assure policies permit banks to serve customers and manage risk through involvement in the derivatives markets.

 Derivatives Policy Issues