On June 4, 2018, the Commodity Futures Trading Commission (CFTC) voted 2-1 in favor of permanently increasing the threshold for swap-dealer registration at $8 billion in annual notational value.
The vote avoids a return to the prior threshold amount of $3 billion scheduled to be effective at the end of 2019. The permanent change is intended to eliminate burdens for non-financial companies that transact in relatively small amounts of swap dealing as a means to hedge against certain business risks. Under prior regulations, CFTC staff estimated that 229 entities would be subject to swap-dealer registration, though under the new permanent threshold, only 145 entities are affected. Companies seek to avoid swap dealer registration due to cost-prohibitive margin and capital requirements. CFTC must now finalize the rule before the end of the year so that market participants can begin tracking their swap-dealing activities on January 1, 2019.
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