Cross-Border 3.0? CFTC Proposes Revision and Codification of Cross-Border Swaps Guidance

On December 18, 2019, the Commodity Futures Trading Commission (the “CFTC” or “Commission”), in a 3 to 2 vote, proposed rules (the “Proposed Rules”) that would, if finalized, supersede the Commission’s current 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 Proposed Rules would classify swap market participants (e.g., U.S. person, guaranteed entity, foreign 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 Commission 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 codify a process for the CFTC to permit Swap Entities to substitute compliance with comparable foreign requirements.