CMC Continues Advocacy on De Minimis Levels

As part of our advocacy efforts on Title VII entity definitions, CMC has previously commented to the CFTC and on Capitol Hill about how the Commission’s proposed de minimis level (for an exemption from being classified as a swap dealer), at $100 mn of annual swaps volume, is too low. Now that the CFTC is closing in on their final entity definitions rule, CMC is again stepping up its advocacy on this topic. As part of the Commercial Alliance along with the Working Group of Commercial Energy Firms, CMC intends in the next couple of weeks to submit a proposal and request meetings at the CFTC, to explain to them again why the proposed level needs to be raised manifold.

The Dodd-Frank Act was meant to reduce systemic risk, not to ensnare corporations in the commodities sectors – who didn’t cause the financial crisis and don’t pose a threat to the global financial system – in a raft of regulations that curtail their business plans.

Preliminary indications are that the CFTC and the Treasury Department might be open to listening to the Commercial Alliance’s ideas, although there is absolutely no guarantee that they will adopt them. But one thing is certain – if companies that transact a small volume of swaps as an aside to their core business, and primarily as hedging instruments for their physical commodities inventory, find themselves being classified as swap dealers after the final entity definitions come into effect, it will not be for want of effort on CMC’s part.


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