Compliance with Certain Swap Regulations

SIFMA, The Clearing House (TCH) and The Financial Services Roundatable (FSR) provide comments to the Commodity Futures Trading Commission (CFTC) on further proposed guidance regarding compliance with certain swap regulations, RIN 3038-AD85. The groups provide detailed commentary on the CFTC’s specific proposals in the Further Proposed Guidance. The groups do not support the proposed clarifications to two prongs of the proposed U.S. person definition. They believe that both the concept of indirect majority ownership and the concept of “bearing unlimited responsibility” for obligations and liabilities are ambiguous and, even if clarified, create significant and unachievable compliance burdens in determining a party’s U.S.-person status. In addition, the groups do not support the proposed alternative interpretation of the aggregation requirement in the Further Proposed Guidance, which requires aggregation of swap transactions of non-U.S. persons with U.S. affiliates—a significant departure from the aggregation requirements under the Final Exemptive Order and the CFTC’s Proposed Interpretive Guidance on the Cross-Border Application of Certain Swaps Provisions (the Proposed Interpretive Guidance).