The Commodity Futures Trading Commission (CFTC) has delayed implementation of the reduction in the de minimis threshold by an additional year. Under the de minimis exception, a person is not considered to be a swap dealer unless its swap dealing activity exceeds an aggregate gross notional amount threshold. Currently, that threshold is set at $8 billion, and is subject to a phase-in period after which the threshold will be reduced to $3 billion. The phase-in period was scheduled to terminate on December 31, 2018, but on October 26, the CFTC issued an order extending the phase-in period by one year, terminating on December 31, 2019 instead of December 31, 2018. The CFTC previously extended the phase-in period by one year in October 2016, and at that time explained that the extension provides additional time for further information to become available to reassess the de minimis exception.
The CFTC provided the following reasons for the delay:
- Entities that currently are not registered swap dealers that may be subject to registration if the $3 billion threshold goes into effect will need to start managing and may need to change their swap dealing activities if they do not want to be subject to the registration requirements, which may reduce competition, liquidity, and efficiency in the swap market.
- CFTC staff will have more time to conduct data analysis on the de minimis exception.
- The new commissioners and the new director of the Division of Swap Dealer and Intermediary Oversight will have more time to better familiarize themselves with the issues relevant to the de minimis exception and the results of the swap data analysis.
The CFTC stated that it plans to take further action on the de minimis thresholdbefore the phase-in period terminates on December 31, 2019.