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Wednesday, July 11, 2012

CFTC Defines Swaps, Exempts Community Banks from Clearing Requirement

The CFTC approved a final rule that implements an ABA-backed end-user exemption to the clearing requirement for banks with assets of $10 billion or less that use swaps to hedge or mitigate commercial risks.

Hundreds of ABA member banks use swaps to hedge and mitigate risk from ordinary banking activities and to meet regulatory expectations for asset-liability management. Without the exemption, it may have been difficult for them to comply with the clearing requirement because of their limited operations or infrequent swaps use.

The CFTC also issued a final rule defining the term “swap,” and it proposed an exemption from clearing requirements for cooperatives. ABA will provide more information about the final rules and the proposal as it becomes available.

Read a fact sheet on the end-user exemption final rule.
Read a fact sheet on the “swap” definition final rule.
Read a fact sheet on proposed exemption for cooperatives.

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