Commodity Futures Trading Commission 

 Office of Public Affairs 

 Three Lafayette Centre 

 1155 21st Street, NW 

 Washington, DC 20581 

 www.cftc.gov

Q & A – Capital Requirements for Swap Dealers and Major Swap Participants 

For those SDs and MSPs that must meet the new capital requirements included in the proposed 

rules, what would those requirements be? 

• An SD or MSP that is also a futures commission merchant (FCM) must meet existing FCM capital requirements, 

and under the proposed rules must maintain at least $20 million of adjusted net capital. 

• If not an FCM, an SD or MSP that is a nonbank subsidiary of a U.S. bank holding company must meet the same 

capital requirements that U.S. banking regulations apply to the bank holding company. The proposed rules also 

specify a minimum of at least $20 million of Tier 1 capital. 

• If not an FCM or a bank holding company subsidiary as described above, an SD or MSP must meet new capital 

requirements that would require it to maintain tangible net equity equal to $20 million plus additional amounts 

for market risk and over-the-counter derivatives credit risk. A firm’s tangible net equity generally would be based 

on net equity as determined under U.S. GAAP, minus intangibles such as goodwill. 

If an SD or MSP is not an FCM, and has a prudential regulator, must it meet capital requirements 

established by the CFTC? 

No. The CFTC is proposing new capital requirements for SDs and MSPs that are not subject to a “prudential 

regulator,” defined in the Dodd-Frank Act as the Federal Reserve Board, the Office of the Comptroller of the Currency, 

the Federal Deposit Insurance Corporation, the Farm Credit Administration or the Federal Housing Finance Agency. 

Do the proposed rules address whether internal models may be used in calculating the applicable 

capital requirements? 

Yes. An SD or MSP may apply for Commission approval to use internal models for purposes of its capital calculations, 

but only if the internal models are approved and subject to ongoing review by the Federal Reserve Board or, as 

applicable, the SEC. The proposed rules also provide that the Commission may at any time determine by written order 

to accept applications requesting approval of internal models used by other SDs and MSPs that are not subject to review 

by the Federal Reserve Board or the SEC. If an SD or MSP is subject to the tangible net equity requirement and has not 

received approval to use internal models, it would be required to calculate its market risk and over-the-counter credit risk 

exposures based upon certain internationally recognized standardized methodologies under the Basel Accord. 

Will the comment period be extended for the Commission’s earlier proposed rulemaking for 

margin requirements for uncleared swaps? 

Yes. The Commission has approved today extending the comment period for its proposed rules establishing margin 

requirements for uncleared swaps. The comment period for the proposed margin rules will be extended until the 

expiration of the comment period for these proposed capital rules, which will be 60 days after their publication in the 

Federal Register. 

Commodity Futures Trading Commission ♦ Office of Public Affairs ♦ 202-418-5080