March 25, 2019

CFTC Finalizes Rule to Help US Small Businesses and Job Creators

Washington, DC - The Commodity Futures Trading Commission (CFTC) today in an open meeting of the Commission adopted the final rule for the de minimis exception for swaps entered into by Insured Depository Institutions (IDIs) in connection with loans to customers.

“This proposal will allow small and medium size commercial borrowers – manufacturers, home builders, agricultural cooperatives, community hospitals and small municipalities - to conduct prudent risk management that is difficult for them under the current rule,” said CFTC Chairman J. Christopher Giancarlo in the open meeting. “Today’s rule is about prudent risk management by America’s small business borrowers and job creators.  It is about investment in local communities in the real economy.  It is about increasing prosperity and employing our fellow Americans.  Frankly, things just don’t get more important than that.”

The final rule is an amendment to the de minimis exception within the swap dealer definition in the Commission’s regulations that establishes as a factor in the de minimis threshold determination whether a given swap has specified characteristics of swaps entered into by IDIs in connection with loans to customers.

This amendment will better allow small and medium-size commercial borrowers to conduct prudent risk management, and promote investment in American communities.  The Commission expects that the amendment will facilitate the provision of swaps by IDIs, particularly small and mid-sized banks, to their loan customers because the IDIs will be able to provide risk-mitigating swaps to these customers in connection with originating loans without counting the swaps towards their de minimis threshold.