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Joint Statement on the IDI Exception to the Swap Dealer Definition

SEC Chairman Jay Clayton

CFTC Chairman Christopher Giancarlo

Dec. 13, 2018

U.S. Securities and Exchange Commission (SEC) Chairman Jay Clayton and U.S. Commodity Futures Trading Commission (CFTC) Chairman J. Christopher Giancarlo issued the following joint statement on the IDI exception to the swap dealer definition in the Dodd-Frank Act:

“We are committed to continuing to engage and take action to better harmonize our agencies’ swap dealer and security-based swap dealer regulations under Title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”).  As part of this commitment, we wish to provide market participants with additional clarity regarding the treatment of swaps that insured depository institutions (“IDIs”) enter into with customers in connection with originating loans.  

“The Dodd-Frank Act included an “IDI exception” in the definition of swap dealer to encourage banks – particularly small and regional institutions – to enter into swaps with loan customers to minimize risks to lenders and borrowers. The CFTC’s June 2018 notice of proposed rulemaking regarding the swap dealer de minimis exception raised a number of issues related to the swap dealer definition and corresponding exemptions.  We look forward to working together to consider these issues.  As we stated in our joint 2012 adopting release, our Commissions have not interpreted the joint rulemaking provisions of the Dodd-Frank Act to require joint rulemaking with respect to the de minimis exception to the swap dealer definition, including an exception for a de minimis quantity of swaps entered into by IDIs in connection with loans.

“More generally, we recognize that it is important for both Commissions to provide market participants with consistent and comparable regulations to the extent practicable.  Our Commissions will continue to work together toward this harmonization goal, which will remain an important part of our 2019 policy agendas.”

The views expressed in this statement are our own and do not necessarily reflect those of our fellow Commissioners or the staff of the SEC or CFTC.

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