Scribd
Upload
122 views1 page

Eue Qa

The document summarizes key aspects of a proposed rulemaking by the Commodity Futures Trading Commission regarding the end-user exception to mandatory clearing of swaps under the Dodd-Frank Act. It defines an end user as a non-financial entity using swaps to hedge commercial risks. The proposed rule would provide an easy process for end users to notify regulators that they are using the clearing exception. It also discusses what activity does and does not qualify for the exception, and seeks public comment on a potential small bank clearing exception allowed under Dodd-Frank.

Uploaded by

MarketsWiki
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
122 views1 page

Eue Qa

The document summarizes key aspects of a proposed rulemaking by the Commodity Futures Trading Commission regarding the end-user exception to mandatory clearing of swaps under the Dodd-Frank Act. It defines an end user as a non-financial entity using swaps to hedge commercial risks. The proposed rule would provide an easy process for end users to notify regulators that they are using the clearing exception. It also discusses what activity does and does not qualify for the exception, and seeks public comment on a potential small bank clearing exception allowed under Dodd-Frank.

Uploaded by

MarketsWiki
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
You are on page 1/ 1

Commodity Futures Trading Commission

Office of Public Affairs


Three Lafayette Centre
1155 21st Street, NW
Washington, DC 20581
www.cftc.gov

Q & A – End-User Exception to Mandatory Clearing of Swaps


What is the goal of the proposed rulemaking?

The goal of this rulemaking is to provide an easy-to-use process for end users who want to use the exception to
mandatory clearing of swaps under the Dodd-Frank Act.

Who is an end user?

An end user is a non-financial entity that is using swaps to hedge or mitigate its commercial risks.

What does an end user do to comply with the law?

The end user must provide notice that it is using the exception to mandatory clearing. This notice is a user-friendly,
check-the-box procedure spelled out in the rule.

How does an end user know if it is hedging or mitigating commercial risk?

The rule provides examples of uses of swaps that constitute hedging or mitigating commercial risk. The rule further
spells out activity that does not qualify as hedging.

Is the proposed definition of hedging or mitigating commercial risk limited to positions that
qualify for hedge accounting treatment or bona fide hedging treatment?

No. Although the proposed definition includes swaps that are recognized as hedges for accounting purposes or as
bona fide hedging under Commission rules, the swaps included within the proposed exclusion for hedging or
mitigating commercial risk are not limited to those categories. Rather, the proposal covers swaps hedging or
mitigating any of a person’s business risks, regardless of their status under accounting guidelines or the bona fide
hedging rule.

What is the potential small bank clearing exception, and what is the CFTC doing about it?

Banks and other financial institutions are financial entities that, as a general rule, are barred by the Dodd-Frank Act
from relying on the end-user clearing exception. However, the law also permits the CFTC to consider whether to
exempt small financial institutions from the general rule that applies to all financial institutions.

As directed by the Dodd-Frank Act, the CFTC is seeking public comment on its options and what approach it
should take on this issue.

Commodity Futures Trading Commission ♦ Office of Public Affairs ♦ 202-418-5080

You might also like