Clearing Rule May Exempt Small Banks

CFTC may free banks under $10 bln from Dodd-Frank clearing mandate for swaps trades

The U.S. Commodity Futures Trading Commission is poised to exempt banks with assets of less than $10 billion from Dodd-Frank Act requirements to guarantee swap trades at clearinghouses, two people briefed on the matter said.

The CFTC, the main U.S. derivatives regulator, is scheduled to consider a final rule July 10 allowing those banks and other companies an exception from the 2010 law’s clearing mandate designed to limit risk in trades, the people said on condition of anonymity because the plan hasn’t been made public. The agency’s five commissioners are also scheduled to propose an exemption for farm credit banks and other cooperatives, the people said. The rules could change before the vote.

Clearinghouses’ Role

Clearinghouses reduce risk in derivatives by accepting collateral from buyers and sellers to guarantee their trades.

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