CFTC Finalizes New Cross-Border Swap Rules, but How Much Has Changed?

On July 23, 2020, the Commodity Futures Trading Commission (the “CFTC”), in a 3 to 2 vote, finalized rules (the “Final Rules”) that superseded certain aspects of the CFTC’s previous policy with respect to the cross-border application of swaps regulations under Commodity Exchange Act (“CEA”) Section 2(i), as set forth in the guidance published by the CFTC in July 2013 (the “2013 Guidance”).

More specifically, the Final Rules, largely consistent with the preceding notice of proposed rulemaking (“Proposed Rules”), classify swap market participants (e.g., U.S. person, guaranteed entity, significant risk subsidiary, foreign branch, U.S. branch), address which cross-border or extraterritorial swaps or swap positions a person would need to consider when determining whether it needs to register with the CFTC as a swap dealer (“SD”) or major swap participant (“MSP” and, together with SDs, “Swap Entities”), categorize certain swaps requirements applicable to Swap Entities for purposes of how they apply to cross-border or extraterritorial swaps transactions, and create a framework for the CFTC to permit Swap Entities to substitute compliance with comparable foreign requirements.

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