CFTC Finalizes Swap Dealer Capital and Financial Reporting Rules

On July 22, 2020, by a 3-2 vote, the Commodity Futures Trading Commission adopted final rules establishing capital and financial reporting requirements for swap dealers and major swap participants.

The Final Rules are the culmination of a process that began with a proposal in May 2011, a re-proposal in December 2016, and a re-opened comment period in December 2019. As one might expect from a rulemaking that took over nine years to complete, the Final Rules reflect a number of significant changes from prior proposals.

This memo describes the Final Rules and identifies some of the key changes from the prior proposals.  The Final Rules’ compliance date will be October 6, 2021.  In advance of that date, non-U.S. SDs, or their trade association or regulators, will need to apply to the CFTC for comparability determinations.  In addition, standalone SDs will need to submit applications to use internal models to calculate credit and market risk, even if they intend to rely on the provisional model approval provisions provided in the Final Rules.

Please click here to read the full alert memorandum.