Statement of Support

Chairman Gary Gensler

July 10, 2012

Final Rule on End-User Exception to the Clearing Requirement for Swaps

I support the final rule on the end-user exception to the clearing requirement for swaps. One of the primary goals of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) was to lower risk to the interconnected financial system by requiring standardized swaps between financial entities to be cleared.

Congress provided that non-financial entities, such as farmers, ranchers, manufacturers and other end-users, should be able to choose whether or not to clear those swaps that hedge or mitigate commercial risks. The Commission’s final rule implements this exception for non-financial entities, establishing criteria for hedging or mitigating commercial risk and imposing minimal reporting requirements for those swaps that come under the end-user exception. The final rule benefited from significant public input, including requiring that most of the information be reported annually, rather than transaction by transaction as had been proposed.

In the Dodd-Frank Act, Congress also directed the Commission to consider exempting from the definition of “financial entity” small financial institutions with total assets of $10 billion or less, thus making them eligible for the end-user exception. After considering the comments received on the end-user exception proposal, the Commission is exempting small financial institutions, including small banks, savings associations, farm credit system institutions and credit unions, at the $10 billion total asset level, as identified by Congress.

Last Updated: July 10, 2012