The US futures regulator may agree to raise the threshold used to identify the biggest swaps market traders to $3 billion, an agency official told Reuters on Friday, providing more relief to commodity merchants and corporations that have fiercely fought the rule.
The $3 billion cut-off, based on the notional value of a company's annual swaps trade, will determine which market participants are deemed swap dealers, saddling them with more onerous capital requirements and higher hedging costs. The Commodity Futures Trading Commission has been steadily increasing the proposed de minimis exemption since it first proposed a level of $100 million in December 2010, and the regulations have proven some of the most complicated of the agency's large Dodd-Frank reforms agenda.
Credit default swaps, a type of over-the-counter derivative, were blamed for amplifying market distress in 2008 as the world slipped into economic recession. Congress passed the Dodd-Frank law in 2010, which established a framework for regulators to use to boost oversight of the previously opaque $700 trillion OTC swaps market. Several months ago the CFTC was considering a threshold of $1 billion, then the agency moved it up to $2 billion in recent weeks, sources have said. The moving target has caused repeated delays in the rule, which is being crafted with the Securities and Exchange Commission.
Comments
Comments are closed for this article.