Regulatory Developments: CFTC Proposes Exemption from Dodd-Frank Clearing Requirement for Certain Inter-Affiliate Swaps


On August 16, 2012, the Commodity Futures Trading Commission (CFTC) issued a proposed rule to exempt swaps between certain affiliates within a corporate group from the clearing requirement under new Section 2(h) of the Commodity Exchange Act. To qualify for the proposed exemption, the following key requirements must be met:

Consolidated Financials Requirement: the exemption is applicable only to swaps between majority-owned affiliates whose financial statements are included in the same consolidated financial statements. Under the proposed rule, the CFTC queries whether a higher ownership threshold should be required, i.e. 100% or 80% (based on Section 1504 of the Internal Revenue Code)...

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Published In: Administrative Agency Updates, Business Organization Updates, Finance & Banking Updates, Securities Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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