I am pleased to support today’s final rule amending the CFTC’s Part 50 rules, which implement the swap clearing requirement of section 2(h)(1) of the Commodity Exchange Act (the Clearing Requirement).  The final rule concurrently achieves two ends—it demonstrates the CFTC’s evolving philosophy on comity and deference towards our international counterparts while alleviating unnecessary regulatory burdens on small domestic institutions that look nothing like Wall Street banks.

First, today’s final rule creates new regulations 50.75 and 50.76, which codify existing exemptions from the Clearing Requirement for swaps entered into with certain central banks, sovereign entities, and international financial institutions.  Just as we would not expect a foreign regulator to impose clearing requirements on the United States Treasury or the Federal Reserve for entering into swaps on behalf of our government, the CFTC will not impose similar requirements on other nation’s finance ministries and central banks.  The same is true for multilateral governmental institutions such as the World Bank Group and the International Monetary Fund.  Mutual respect and a two-way-street must be the cornerstone of our international regulatory relations.

Second, the final rule establishes new regulations 50.77, 50.78, and 50.79, which exempt from the Clearing Requirement certain swaps entered into by small bank holding companies, savings and loan holding companies, and community development financial institutions.  In addition, the final rule clarifies existing exemptions for banks, savings associations, farm credit systems, and credit unions with total assets of less than $10 billion.  These entities are the engines of the real economy, providing financial support to American communities, businesses, and families.  While exempting these entities from the Clearing Requirement makes sense in normal times, doing so is especially critical now.  As we continue to manage the fallout of the COVID-19 (coronavirus) pandemic, it is particularly important that the CFTC advance our strategic goal of regulating the derivatives markets to promote the interests of all Americans.[1]  Today’s final rule is a step in that direction.