In a speech yesterday for the Mercatus Center at George Mason University and the Institute for Financial Markets,  CFTC Commissioner Brian Quintenz advocated for:

  • An application of the swap dealer de minimis threshold based upon risk-based standards, instead of solely on the basis of swap-related activity (i.e., departing from the current standard, which relies solely upon “notional threshold,” and migrating to a standard that takes into account the level of systemic risk posed to the financial markets by a non-swap dealer’s activities); and
  • A loosening of the administrative restrictions placed upon the statutory exclusion from swap dealing for swaps entered into in connection with the origination of a loan by an insured depository institution (commonly referred to as the “IDI Exception“).  Specifically, Commissioner Quintenz advocated for expanding the types of credit arrangements that should qualify for the IDI Exception, and changing a temporal regulatory restriction that requires a qualifying hedge to be entered into between 90 days before and 180 days after the loan agreement is entered into by the lender and borrower swap counterparties.

We expect that many non-swap dealer banks and other financial institutions will enjoy their morning cup of coffee just a little bit more today.

Good morning.  Good coffee, made better? DR2