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BILLING CODE: 6351-01-P

COMMODITY FUTURES TRADING COMMISSION

17 CFR Part 50

RIN 3038-[ ]

Amendments to Swap Clearing Requirement Exemptions Under Part 50

AGENCY: Commodity Futures Trading Commission.

ACTION: Notice of proposed rulemaking; supplemental notice of proposed rulemaking.

SUMMARY: The Commodity Futures Trading Commission (Commission or CFTC) is 

proposing amendments to the regulations governing which swaps are exempt from the clearing 

requirement set forth in section 2(h)(1) of the Commodity Exchange Act (CEA). The proposed 

amendments would address the treatment of swaps entered into by certain central banks, 

sovereign entities, and international financial institutions. The Commission also is issuing a 

supplemental notice of proposed rulemaking to further propose amendments to exempt from 

required clearing swaps entered into by certain bank holding companies, savings and loan 

holding companies, and community development financial institutions. Lastly, the Commission 

is proposing to publish a compliance schedule setting forth all the past compliance dates for the 

2012 and 2016 swap clearing requirement regulations and to make certain other, non-substantive 

technical amendments to part 50. 

DATES: Comments must be received on or before [INSERT DATE 60 DAYS AFTER DATE 

OF PUBLICATION IN THE FEDERAL REGISTER].

ADDRESSES: You may submit comments, identified by RIN number 3038-[ ], by any of 

the following methods:
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• CFTC Comments Portal: http://comments.cftc.gov. Select the “Submit Comments” 

link for this rulemaking and follow the instructions on the Public Comment Form.

• Mail: Send to Christopher Kirkpatrick, Secretary of the Commission, Commodity 

Futures Trading Commission, Three Lafayette Centre, 1155 21st Street, NW, Washington, DC 

20581.

• Hand Delivery/Courier: Follow the same instructions as for Mail, above.

Please submit your comments using only one method. Submissions through the CFTC 

Comments Portal are encouraged.

All comments must be submitted in English, or if not, accompanied by an English 

translation. Comments will be posted as received to https://comments.cftc.gov. You should 

submit only information that you wish to make available publicly. If you wish the Commission 

to consider information that you believe is exempt from disclosure under the Freedom of 

Information Act (FOIA), a petition for confidential treatment of the exempt information may be 

submitted according to the procedures established in section 145.9 of the Commission’s 

regulations.1

The Commission reserves the right, but shall have no obligation, to review, pre-screen, 

filter, redact, refuse or remove any or all of your submission from http://www.cftc.gov that it may 

deem to be inappropriate for publication, such as obscene language. All submissions that have 

been redacted or removed that contain comments on the merits of the rulemaking will be retained 

in the public comment file and will be considered as required under the Administrative 

Procedure Act and other applicable laws, and may be accessible under the FOIA.

 1 Commission regulation 145.9. Commission regulations referred to herein are found on the Commission’s website 

at: http://www.cftc.gov/LawRegulation/CommodityExchangeAct/index.htm.
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FOR FURTHER INFORMATION CONTACT: Sarah E. Josephson, Deputy Director, at 

202-418-5684 or sjosephson@cftc.gov; Megan A. Wallace, Senior Special Counsel, at 202-418-

5150 or mwallace@cftc.gov; Melissa D’Arcy, Special Counsel, at 202-418-5086 or 

mdarcy@cftc.gov; Division of Clearing and Risk; or Ayla Kayhan, Office of the Chief 

Economist, at 202-418-5947 or akayhan@cftc.gov, in each case at the Commodity Futures 

Trading Commission, Three Lafayette Centre, 1155 21st Street, NW, Washington, DC 20581.

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Background

A. Ongoing Review of Part 50 Regulations

B. Swap Clearing Requirement

C. Swaps with Foreign Governments, Foreign Central Banks, and International Financial 

Institutions Not Subject to the Clearing Requirement

1. Foreign Governments and Foreign Central Banks

2. International Financial Institutions

D. DCR No-Action Letters for Relief from the Clearing Requirement for International 

Financial Institutions

II. Newly Proposed Amendments to Part 50

A. New Subpart D for Swaps Not Subject to the Clearing Requirement

1. Proposed Definition of Central Bank 

2. Proposed Definition of Sovereign Entity

3. Proposed Definition of International Financial Institution

4. Proposed Exemption from the Clearing Requirement for Swap Transactions with 

Central Banks, Sovereign Entities, and International Financial Institutions

B. Data Related to Swaps entered into by Central Banks, Sovereign Entities, and 

International Financial Institutions

C. New Compliance Schedule for Subpart B

1. 2012 Clearing Requirement Determination
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2. 2016 Clearing Requirement Determination

3. New Proposed Regulation 50.26

D. Technical Amendment to Subpart C for Banks, Savings Associations, Farm Credit 

System Institutions, and Credit Unions

III. Supplemental Proposal of Proposed Rulemaking for Bank Holding Companies, 

Savings and Loan Holdings Companies, and Community Development Financial

Institutions 

A. Background on Prior Proposal and Supplemental Proposal

B. Changes to the Proposed Rule Text for CDFIs and Technical Revisions to Proposed Rule 

Text for Bank Holding Companies and Savings and Loan Holding Companies

1. CDFIs

2. Bank holding companies and savings and loan holding companies

C. Updated Data regarding the Use of Swaps by CDFIs, Bank Holding Companies, and 

Savings and Loan Holding Companies

IV. Commission’s Section 4(c) Authority

V. Proposed Rules Do Not Effect Margin Requirements for Uncleared Swaps

VI. Related Matters

A. Regulatory Flexibility Act

B. Paperwork Reduction Act

C. Cost-Benefit Considerations

1. Statutory and Regulatory Background

2. Considerations of the Costs and Benefits of the Commission’s Action

a. Costs

b. Benefits

3. Section 15(a) Factors

a. Protection of Market Participants and the Public

b. Efficiency, Competitiveness, and Financial Integrity of Swap Markets

c. Price Discovery

d. Sound Risk Management Practices

e. Other Public Interest Considerations
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D. General Request for Comment

E. Antitrust Considerations

I. Background

A. Ongoing Review of Part 50 Regulations

On May 9, 2017, the Commission published in the Federal Register a request for 

information2 seeking suggestions from the public for simplifying the Commission’s regulations 

and practices, removing unnecessary burdens, and reducing costs. In response, a number of 

commenters asked the Commission to codify certain staff no-action letters and Commission 

guidance through rulemakings.3 The Commission also engaged in an agency-wide review of its 

rules, regulations, and practices to make them simpler, less burdensome, and less costly.4 

In its review, the Commission identified the treatment of swaps entered into with central 

banks, foreign governments, and international financial institutions, as set forth in the preamble 

to the 2012 End-User Exception final rule as a provision that should be codified.

5 In the 2012 

preamble, the Commission determined, for reasons discussed below, that central banks, foreign 

governments, and international financial institutions should not be subject to the clearing 

requirement set forth in section 2(h)(1) of the CEA (Clearing Requirement).6 The Commission 

is proposing regulatory revisions to codify the treatment of swaps entered into with certain 

 2 See 82 FR 21494 (May 9, 2017) and 82 FR 23765 (May 24, 2017). 

3 See, e.g., Comment Letter from the Institute of International Banking, International Swaps and Derivatives 

Association, Inc., and Securities Industry and Financial Markets Association dated July 24, 2017, at 2.

4 82 FR at 21494; 82 FR at 23765.

5 End-User Exception to the Clearing Requirement for Swaps, 77 FR 42560 (Jul. 19, 2012) (hereinafter, the 2012 

End-User Exception final rule).

6 Id. at 42562. 
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central banks, foreign governments,

7 and international financial institutions.8

 The proposed 

rulemaking also addresses four no-action letters that the Commission’s Division of Clearing and 

Risk (DCR) issued in 2013 and 20179 in response to requests from four international financial 

institutions for assurance that DCR would not recommend the Commission take enforcement 

action for not clearing swaps covered by the Clearing Requirement, if the international financial 

institution satisfies the provisions in the letter. The proposed revisions to part 50 of the 

Commission’s regulations would exempt swaps entered into with certain central banks, 

sovereign entities, and international financial institutions from the Clearing Requirement.10 The 

Commission believes that this rule proposal is consistent with the Commission’s approach set 

out in the preamble to the 2012 End-User Exception final rule.11 

This proposal includes additional revisions to part 50 of the Commission’s regulations 

that are intended to simplify the text of the requirements and to minimize the compliance 

 7 For purposes of this proposal, foreign governments will be referred to as “sovereign entities” for the reasons 

discussed below.

8 The Commission is proposing the following definitions for these three terms: (1) the Commission is proposing to 

define a “central bank” in a new regulation 50.75(a) as meaning “a reserve bank or monetary authority of a central 

government (including the Board of Governors of the Federal Reserve System or any of the Federal Reserve Banks) 

or the Bank for International Settlements”; (2) the Commission is proposing to define a “sovereign entity” in new 

regulation 50.75(b) as meaning “a central government (including the U.S. government), or an agency, department, or 

ministry of a central government”; and (3) the Commission is proposing to define an “international financial 

institution” in new regulation 50.76(b) as one of 22 named entities, or “[a]ny other entity that provides financing for 

national or regional development in which the U.S. government is a shareholder or contributing member.” 

9 See CFTC Letter No. 13-25 (June 10, 2013) (providing no-action relief to the Corporación Andina de Fomento); 

CFTC Letter No. 17-57 (Nov. 7, 2017) (providing no-action relief to Banco Centroamericano de Integración 

Económica), CFTC Letter No. 17-58 (Nov. 7, 2017) (providing no-action relief to the European Stability 

Mechanism); and CFTC Letter No. 17-59 (Nov. 7, 2017) (providing no-action relief to the North American 

Development Bank).

10 The swap clearing requirement of section 2(h)(1)(A) of the CEA is codified in part 50 of the Commission’s 

regulations.

11 See 77 FR at 42561-62.
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obligations for market participants. The Commission is proposing to include a chart of 

compliance dates for all swaps that the Commission has determined are required to be cleared 

under Commission regulation 50.4. In addition, the Commission took this opportunity to 

consider the structure and organization of part 50 of the Commission’s regulations and is 

proposing minor heading changes and restructuring amendments. The Commission is proposing

to re-codify the regulatory provisions exempting eligible banks, savings associations, farm credit 

institutions, and credit unions from the definition of “financial entity” for purposes of section 

2(h)(7)(A) of the CEA by moving the current requirements to a separate rule so that the 

exemption is easier to locate in the Commission’s regulations and the conditions to claim the 

exemption are set forth more clearly. The Commission is not proposing to alter the substance of 

this exemption. 

Finally, on August 29, 2018, the Commission issued a notice of proposed rulemaking that 

would codify existing relief and exempt swaps entered into by certain bank holding companies, 

savings and loan holding companies, and community development financial institutions (CDFIs) 

from the swap clearing requirement in section 2(h)(1)(A) of the CEA.12 The Commission is 

supplementing that notice of proposed rulemaking with minor amendments to the regulation rule 

text proposed, as well as with technical revisions, and is soliciting additional input from the 

public regarding this proposed exemption.

13 

 12 Amendments to Clearing Exemption for Swaps Entered Into by Certain Bank Holding Companies, Savings and 

Loan Holding Companies, and Community Development Financial Institutions, 83 FR 44001 (Aug. 29, 2018) 

(hereinafter, the 2018 Proposal).

13 The Commission confirms that this supplemental proposal is not a replacement or withdrawal of the 2018 

Proposal. Unless specifically amended in this release, all regulatory provisions proposed in the 2018 Proposal 

remain under active consideration for adoption as final rules. As discussed further below, the Commission received 

only one comment letter on its 2018 Proposal. 
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The Commission is requesting comments on all of these proposed rules and rule 

amendments. 

B. Swap Clearing Requirement

The CEA, as amended by Title VII of the Dodd-Frank Wall Street Reform and Consumer 

Protection Act (Dodd-Frank Act),

14 establishes a comprehensive regulatory framework for 

swaps. The CEA requires a swap: (1) to be cleared through a derivatives clearing organization 

(DCO) that is registered under the CEA or a DCO that is exempt from registration under the 

CEA if the Commission has determined that the swap is required to be cleared, unless an 

exception to the clearing requirement applies;15 (2) to be reported to a swap data repository 

(SDR) or the Commission;16 and (3) if the swap is subject to the Clearing Requirement, to be

executed on a designated contract market (DCM), or swap execution facility (SEF) that is 

registered with the Commission pursuant to section 5h of the CEA or a SEF that has been 

exempted from registration pursuant to section 5h(g) of the CEA, unless no DCM or SEF has 

made the swap available to trade.17

Pursuant to section 2(h)(1)(A) of the CEA, if a swap is subject to the Clearing 

Requirement, “it shall be unlawful for any person to engage in a swap unless that person submits 

such swap for clearing to a DCO that is registered under the CEA or a DCO that is exempt from 

registration under the CEA if the swap is required to be cleared.”18 In 2012, the Commission 

 14 Pub. L. 111-203, 124 Stat. 1376 (2010).

15 Section 2(h)(1) of the CEA.

16 Sections 2(a)(13), 4r, and 21(b) of the CEA.

17 Section 2(h)(8) of the CEA. 

18 Section 2(h)(1)(A) of the CEA.
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issued its first clearing requirement determination pertaining to four classes of interest rate swaps 

and two classes of credit default swaps.19 In 2016, the Commission expanded the classes of 

interest rate swaps subject to the clearing requirement to cover fixed-floating interest rate swaps 

denominated in nine additional currencies, as well as certain additional basis swaps, forward rate 

agreements, and overnight index swaps.20 The regulations implementing the Clearing 

Requirement are in Commission regulation 50.4. 

C. Swaps with Foreign Governments, Foreign Central Banks, and International 

Financial Institutions Not Subject to the Clearing Requirement

In the preamble to the 2012 End-User Exception final rule, in response to specific 

requests from commenters that the Commission determine certain entities, or types of entities, be 

permitted to elect the End-User Exception, the Commission stated that based on considerations 

of comity and in keeping with the traditions of the international system, swaps entered into with 

certain foreign governments, foreign central banks, and international financial institutions should 

not be subject to the clearing requirement under section 2(h)(1) of the CEA.21 The Commission 

did not, however, codify its determination in rule text.

The Commission provided several reasons for its determination that foreign governments, 

foreign central banks, and international financial institutions should not be subject to the 

 

19 Clearing Requirement Determination Under Section 2(h) of the CEA, 77 FR 74284 (Dec. 13, 2012) (hereinafter, 

the 2012 Clearing Requirement Determination). 

20 Clearing Requirement Determination Under Section 2(h) of the CEA for Interest Rate Swaps, 81 FR 71202 (Oct. 

14, 2016) (hereinafter, the 2016 Clearing Requirement Determination).

21 77 FR at 42561-62. The Commission noted that uncleared swaps with a counterparty that is subject to the CEA 

and Commission regulations with regard to that transaction must still comply with the CEA and Commission 

regulations as they pertain to uncleared swaps, e.g., the recordkeeping and reporting requirements under parts 23 and 

45 of the Commission’s regulations. Id.
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Clearing Requirement. First, the Commission noted that the Federal Reserve Banks and the 

Federal Government are not subject to the Clearing Requirement under the Dodd-Frank Act.

22 

The Commission stated it would therefore expect that if any part of the Federal Government, 

Federal Reserve Banks, or international financial institutions of which the United States is a 

member were to engage in swap transactions in a foreign jurisdiction, the actions of those entities 

with respect to those transactions should not be subject to foreign regulation.23 Second, the 

Commission stated that “canons of statutory construction ‘assume that legislators take account of 

the legitimate sovereign interests of other nations when they write American laws.’”24 In 

addition, the Commission noted that international financial institutions operate with the benefit 

of certain privileges and immunities under U.S. law indicating that such entities may be treated 

similarly under certain circumstances.25 The Commission stated that there is nothing in the text 

or legislative history of the swap-related provisions of the Dodd-Frank Act to establish that 

Congress intended to deviate from the traditions of the international system by subjecting foreign 

 22 Id. Congress specifically excluded “any agreement, contract, or transaction a counterparty of which is a Federal 

Reserve bank, the Federal Government, or a Federal agency that is expressly backed by the full faith and credit of 

the United States” from the definition of a swap under section 1a(47)(B)(ix) of the CEA. Only swaps are subject to 

the Clearing Requirement under the Dodd-Frank Act. See section 2(h) of the CEA. 

23 77 FR at 42561-62.

24 Id. at 42562 (citing F. Hoffman-LaRoche Ltd. v. Empagran S.A., 542 U.S. 155, 164 (2004)).

25 Id. at 42562 (citing various provisions of the U.S. Code, a Commission staff interpretative letter (stating “[b]ased 

on the unique attributes and status of the World Bank Group as a multinational member agency, . . . the CFTC 

believes that the World Bank Group need not be treated as a U.S. person for purposes of application of the CFTC’s 

Part 30 rules”), and a determination of the Board of Governors of the Federal Reserve that the Bank Holding 

Company Act does not apply to foreign governments because they are not “companies” as such term is defined in 

the Bank Holding Company Act). 
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governments, foreign central banks, or international financial institutions to the Clearing 

Requirement set forth in section 2(h)(1) of the CEA.

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1. Foreign Governments and Foreign Central Banks

As noted in the 2012 End-User Exception final rule preamble, the Federal Reserve Banks 

and the Federal Government are not subject to the Clearing Requirement under the Dodd-Frank

Act, and the Commission would expect that the swaps activities of these entities would not be 

subject to foreign regulation.27 In order to apply consistent treatment to foreign governments 

and foreign central banks, the Commission stated in the preamble to the 2012 End-User 

Exception final rule that transactions with these entities should not be subject to the Clearing 

Requirement.28 

The Commission also stated that for the purpose of the Clearing Requirement, the 

Commission considers the Bank for International Settlements (BIS), of which the Federal 

Reserve and foreign central banks are members, to be a foreign central bank, and, therefore, 

transactions with BIS should not be subject to the Clearing Requirement.29

 26 Id. at 42562. The Commission also noted that if a foreign government, foreign central bank, or international 

financial institution enters into a non-cleared swap with a counterparty that is subject to the CEA and Commission 

regulations with regard to that transaction, then the counterparty should still comply with the CEA and Commission 

recordkeeping and recording requirements that apply to non-cleared swaps. 

27 77 FR at 42561-62. In 2013, central banks and public bodies charged with or intervening in the management of 

the public debt in the United States were excluded from EMIR. See Commission Delegated Regulation (EU) No 

1002/2013 of 12 July 2013, 2013 O.J. (L 279) 2 (Oct. 19, 2013), available at http://eur-lex.europa.eu/legalcontent/EN/ALL/?uri=CELEX:32013R1002. See also Commission Delegated Regulation (EU) 2017/979 of 2 

March 2017 (amending Regulation (EU) No 648/2012 of the European Parliament and of the Council on OTC 

derivatives, central counterparties and trade repositories to exempt central banks and public bodies from Australia, 

Canada, Hong Kong, Mexico, Singapore, and Switzerland).

28 77 FR at 42562.

29 Id. at 42561, n.13.
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The Commission’s position with regard to the treatment of swaps with foreign 

governments and foreign central banks for purposes of the clearing requirement has not changed

since the adoption of the 2012 End-User Exception final rule. Swaps with foreign governments 

and foreign central banks are not required to be cleared currently and, if this proposal is codified, 

would not be subject to any additional requirements. 

2. International Financial Institutions

In the preamble to the 2012 End-User Exception final rule, the Commission identified 17 

entities whose transactions should not be subject to the Clearing Requirement.30 The entities 

include the international financial institutions defined as such in section 262r(c)(2) of Title 22 of 

the U.S. Code,

31 and the multilateral development banks additionally referenced in a provision of 

the European Market Infrastructure Regulation (EMIR) that exempts such entities from all but 

the reporting obligation under EMIR.32 The Commission did not extend its determination to 

 30 The 17 international financial institutions identified in the preamble to the 2012 End-User Exception final rule are 

the following: (1) African Development Bank; (2) African Development Fund; (3) Asian Development Bank; (4) 

Bank for Economic Cooperation and Development in the Middle East and North Africa; (5) Caribbean Development 

Bank; (6) Council of Europe Development Bank; (7) European Bank for Reconstruction and Development; (8) 

European Investment Bank; (9) European Investment Fund; (10) Inter-American Development Bank; (11) InterAmerican Investment Corporation; (12) International Bank for Reconstruction and Development (part of the World 

Bank Group); (13) International Development Association (part of the World Bank Group); (14) International 

Finance Corporation (part of the World Bank Group); (15) International Monetary Fund; (16) Multilateral 

Investment Guarantee Agency (part of the World Bank Group); and (17) Nordic Investment Bank. 77 FR at 42561-

62 n.14.

31 22 U.S.C. 262r(c)(2). 

32 The twelve entities exempt from certain requirements under EMIR, which were also named in the 2012 End-User 

Exception final rule, are the following: (1) International Bank for Reconstruction and Development; (2) 

International Finance Corporation; (3) Inter-American Development Bank; (4) Asian Development Bank; (5) 

African Development Bank; (6) Council of Europe Development Bank; (7) Nordic Investment Bank; (8) Caribbean 

Development Bank; (9) European Bank for Reconstruction and Development; (10) European Investment Bank; (11) 

European Investment Fund; and (12) Multilateral Investment Guarantee Agency. See EMIR Article 1(5)(a) of 

Regulation (EU) No. 648/2012; Section 4.2 of part 1 of Annex VI to Directive 2006/48/EC, available at

http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=celex%3A32012R0648 and http://eur-lex.europa.eu/legalcontent/EN/TXT/?uri=CELEX%3A32006L0048. The Commission noted that the exemption for international 

financial institutions would be consistent with EMIR and other foreign laws. 77 FR at 42561 n.14. 
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sovereign wealth funds or similar entities because the Commission believed these entities were 

similar to investment funds. The Commission stated that “[t]he foregoing rationale and 

considerations do not, however, extend to sovereign wealth funds or similar entities due to the 

predominantly commercial nature of their activities.”33 The Commission’s position with regard 

to international financial institutions has not changed since the adoption of the 2012 End-User 

Exception final rule. Consistent with that position, there have been four supplemental CFTC 

staff no-action letters that expanded the scope of international financial institutions afforded

relief from the Clearing Requirement. 

D. DCR No-Action Letters for Relief from the Clearing Requirement for International 

Financial Institutions

After the publication of the 2012 End-User Exception final rule, in 2013, DCR issued a 

no-action letter to Corporación Andina de Fomento (CAF), an economic development financing 

institution established pursuant to a treaty among 10 Latin American countries, stating DCR 

would not recommend that the Commission take enforcement action against CAF for failure to 

comply with the Clearing Requirement.34 DCR was persuaded by CAF’s representation that its 

organization and functions were similar to the international financial institutions addressed by 

the preamble to the 2012 End-User Exception final rule. DCR accepted CAF’s statement that, 

like a number of the multilateral development banks that are named as international financial 

institutions in the adopting release, its purpose is to foster and promote sustainable development 

 

33 Id. at 42562, n.18.

34 CFTC Letter No. 13-25 (June 10, 2013). The letter required CAF to comply with other provisions of the CEA and 

Commission regulations, such as the recordkeeping and reporting requirements under parts 23 and 45 of the 

Commission’s regulations, which would apply to a non-cleared swaps entered into by CAF opposite a counterparty 

who is subject to the CEA and Commission regulations with regard to that transaction.
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and economic integration. CAF also indicated it pursues its mission primarily through project 

and corporate lending and trade finance, generally in circumstances under which borrowers 

would not have access to traditional commercial lending sources.35 DCR accepted that CAF 

used derivatives to hedge and reduce exposure to interest and exchange rate risks, and that it 

does not hold or issue derivatives for trading or speculative purposes.

36 Furthermore, DCR 

agreed that CAF was established pursuant to an international treaty, with strict limitations on 

ownership which ensure that the sovereign nations are the controlling shareholders. 

Additionally, the Minister of Finance or equivalent officeholder of each principal shareholder 

country usually serves as a board member. Due to a combination of shareholdings, share 

classifications and voting rights, limitations on share transfers and other governance 

mechanisms, DCR agreed that the principal shareholder countries are assured control over CAF. 

DCR agreed that CAF has been granted various immunities and privileges from the principal 

shareholder countries, including, among other things: immunity from expropriation; free 

convertibility and transferability of its assets; exemption from all taxes and tariffs on income, 

properties, or assets; and exemption from any restrictions, regulations, controls, or moratoria 

with respect to its property or assets.

In 2017, DCR received three more requests for no-action relief from the Clearing 

Requirement from three other international financial institutions: (1) Banco Centroamericano de 

Integración Económica (CABEI) (an economic development financing institution established 

pursuant to a treaty among 11 Latin American countries, Spain, and Taiwan), (2) European 

 35 Id. at 3.

36 Id.
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Stability Mechanism (ESM) (a lending institution established by European Union member states 

to provide emergency financial assistance to member states located in the Eurozone), and (3) 

North American Development Bank (NADB) (a financing institution established by the United 

States and Mexico under the auspices of the North American Free Trade Agreement to finance 

environmentally sustainable infrastructure projects in the region along the U.S.-Mexican 

border).37 

CABEI, ESM, and NADB each requested to have their transactions treated like CAF and 

the transactions with the international financial institutions addressed by the preamble to the 

2012 End-User Exception final rule. In their request letters, CABEI, ESM, and NADB argued

that their functions, missions, and ownership structures are analogous to the functions, missions,

and ownership structures of CAF and the international financial institutions referenced in the 

End-User Exception final rule.38 Based on their representations, DCR issued no action letters to 

each of the requesting institutions.

39 

II. Newly Proposed Amendments to Part 50

A. New Subpart D for Swaps Not Subject to the Clearing Requirement

 37 CFTC Letter No. 17-57, at 3 n.10; CFTC Letter No. 17-58, at 3 n.11, and CFTC Letter No. 17-59 at 3.

38 NADB is listed as a “multilateral development bank” by the four most recent Reports to Congress from the 

Chairman of the National Advisory Council on International Monetary and Financial Policies, dated March 2016, 

July 2017, June 2018, and April 2019, available at

https://www.treasury.gov/resource-center/international/development-banks/Pages/congress-index.aspx. 

39 CFTC Letter Nos. 17-57, 17-58, and 17-59, respectively. Consistent with the CAF letter, DCR required each 

international financial institution to comply with other provisions of the CEA and the Commission’s regulations, 

such as the recordkeeping and reporting requirements under parts 23 and 45 of the Commission’s regulations, which 

would apply to an uncleared swap entered into by an international financial institution opposite a counterparty that is 

subject to the CEA and Commission regulations with regard to that transaction. 
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The Commission proposes to exempt swaps entered into with a central bank, sovereign 

entity, or international financial institution from the Clearing Requirement. In proposing to 

adopt an exemption for swaps entered into with central banks and sovereign entities in new 

regulation 50.75, and an exemption for swaps entered into with international financial 

institutions in new regulation 50.76, the Commission would be providing legal certainty to a 

narrowly defined group of entities that the swaps into which they enter are not subject to the 

Clearing Requirement, provided such swaps are reported to a swap data repository. The 

Commission is proposing to create a new subpart D in part 50 of the Commission’s regulations 

for proposed regulations 50.75 and 50.76, as well as three other regulations discussed below. 

The creation of this new subpart is an effort to distinguish exemptions that apply to specific 

swaps from the exceptions and exemptions for market participants eligible to elect an exception 

or exemption under subpart C of part 50. This distinction is important because the proposed 

exemptions for swaps under subpart D would not be eligible for an analogous exemption from 

margin for uncleared swaps, as discussed below. Also, some of the proposed subpart D 

exemptions for swaps are more limited and, in some cases, have additional conditions.40

The Commission notes that the proposed exemptions are intended to be consistent with 

the Commission’s determination set forth in the 2012 End-User Exception final rule and would 

not limit the applicability of any CEA provision or Commission regulation to any person or 

 40 For example, the proposed exemption for swaps entered into by CDFIs in proposed regulation 50.77 of subpart D 

would be available only for certain types of interest rate swaps. The exceptions and exemptions under subpart C of 

part 50 of the Commission’s regulations apply generally to an entity that satisfies certain conditions. 
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transaction except as provided in the proposed rulemaking.41 This proposal modifies some of the 

terms that will be used to refer to the entities that are exempt from the Clearing Requirement, but 

this modification is not intended to change the scope or substance of the exemption. For 

example, in the 2012 End-User Exception final rule the Commission referred to “foreign central 

banks.” Under this proposal, the Commission is proposing to use the term “central bank” and to 

include U.S. central bank entities such as the Board of Governors of the Federal Reserve System 

and other Federal Reserve Banks in the definition of “central banks” proposed to be exempted 

from the Clearing Requirement. This approach is similar to the one taken by the Commission 

and the prudential regulators in promulgating the margin requirements for uncleared swaps.

42

In addition, in the 2012 End-User Exception final rule, the Commission referred to 

certain exempt swap counterparties as “foreign governments.” The term “foreign government” 

was intended to refer to sovereigns, similar to the U.S. Federal Government, that were located 

outside of the U.S. Because the Commission distinguished the Federal Government from state 

and local government entities, the term “foreign government” was intended to apply only to the 

federal level of governmental organizations.43 In an effort to make that distinction clear and to 

emphasize the fact that state level governmental bodies would not be eligible for this exemption, 

the Commission is proposing to use the term “sovereign entities” in this rule proposal rather than

“foreign government,” which was the term used in the 2012 End-User Exception final rule. 

 41 The Commission notes that uncleared swaps with a counterparty that is subject to the CEA and Commission 

regulations with regard to such swaps must still comply with the CEA and Commission regulations as they pertain 

to uncleared swaps.

42 See definition of “sovereign entity” in Commission regulation 23.151.

43 77 FR at 42562. The Commission stated that, “Congress did not expressly exclude state and local government 

entities form the ‘financial entity’ definition. On the contrary, in Section 2(h)(7)(C)(i)(VII), Congress expressly 

included employee benefit plans of state and local governments in the ‘financial entity’ definition, thereby 

prohibiting them from using the end-user exception.” Id. 
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The Commission seeks comment regarding the terms and definitions proposed below. 

1. Proposed Definition of Central Bank

Proposed regulation 50.75(a) would set forth a definition of “central bank.” The 

proposed definition would define central bank to mean “a reserve bank or monetary authority of 

a central government (including the Board of Governors of the Federal Reserve System or any of 

the Federal Reserve Banks) or the Bank for International Settlements.”44 The Commission 

believes an exemption from the Clearing Requirement for central banks is appropriate because 

these entities are created by statute, are authorized to work to promote the public interest, and are 

part of, or aligned with, a central government. The authorizing statutes generally provide that the 

government owns all or part of the capital stock or equity interest of the central bank.

45 The 

proposed definition also includes the Bank for International Settlements (BIS) for clarity. BIS is 

made up of only central banks and monetary authorities. The Commission therefore believes it is 

appropriate to include BIS in the definition of central bank for purposes of this proposal.

In Commission regulation 23.151, the definition of “financial end user” for purposes of 

the Commission’s uncleared swap margin requirements excludes the Bank for International 

Settlements from the uncleared margin requirements.

46 Part 23 of the Commission’s regulations 

 

44 Congress specifically excluded “any agreement, contract, or transaction a counterparty of which is a Federal 

Reserve bank, the Federal Government, or a Federal agency that is expressly backed by the full faith and credit of 

the United States” from the definition of a swap. The proposed definition includes “any of the Federal Reserve 

Banks” for clarity.

45 E.g., Article 28.2, Capital of the ECB Protocol on the Statute of the European System of Central Banks and of the 

European Central Bank, available at https://www.ecb.europa.eu/ecb/legal/pdf/en_statute_2.pdf. 

46 Commission regulation 23.151, in part, states that, “The term ‘financial end user’ does not include any 

counterparty that is: (i) A sovereign entity; (ii) A multilateral development bank; (iii) The Bank for International 

Settlements; (iv) An entity that is exempt from the definition of financial entity pursuant to section 2(h)(7)(C)(iii) of 

the [CEA] and implementing regulations; (v) An affiliate that qualifies for the exemption from clearing pursuant to 
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include a separate definition for the term “sovereign entity.” Under Commission regulation 

23.151, “[s]overeign entity means a central government (including the U.S. government) or an 

agency, department, ministry, or central bank of a central government.”47 The Commission is 

not proposing to use identical definitions in new subpart D of part 50 as it adopted in part 23 of 

the Commission’s regulations.

48 Certain types of entities may be defined differently for 

purposes of either rule set, but as an overall matter, the Commission believes this proposal to 

define “sovereign entity” and “central bank” is broadly consistent with part 23 of the 

Commission’s regulations. 

Request for Comment. The Commission requests comment on the scope of its proposed 

definition of central bank. Are there any central banks that are not established and operating 

pursuant to a statute? If so, should such a central bank be treated differently? Should the 

Commission distinguish between national central banks and regional central banks? Should the 

Commission consider adopting an alternative definition for “central bank,” such as the definition 

included in section 25B of the Federal Reserve Act?49

2. Proposed Definition of Sovereign Entity

 section 2(h)(7)(D) of the [CEA]; or (vi) An eligible treasury affiliate that the Commission exempts from the 

requirements of §§ 23.150 through 23.161 by rule.”

47 Id. 

48 Under part 23 of the Commission’s regulations, the Bank for International Settlements is excluded from the term 

“financial end user” for purposes of the uncleared margin rules. Commission regulations 23.154 and 23.155 require 

calculations of initial and variation margin for counterparties that are either swap entities or financial end users. As 

such, the Bank for International Settlements is not subject to the uncleared initial or variation margin requirements 

under part 23. Under proposed regulation 50.75(a), the Bank for International Settlements would be a “central 

bank” and swaps entered into with a central bank would not be subject to the Clearing Requirement. Although the 

Commission is using different terminology, the Bank for International Settlements would be exempt from 

requirements under both parts of the Commission’s regulations. 

49 Section 25B of the Federal Reserve Act states that, “[t]he term ‘central bank’ includes any foreign bank or banker 

authorized to perform any one or more of the functions of a central bank.” 12 U.S.C. 632.
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Proposed regulation 50.75(b) would set forth a definition of “sovereign entity” for 

purposes of the Clearing Requirement. Under the proposed definition, sovereign entity would 

mean a “central government (including the U.S. government) or an agency, department, or 

ministry of a central government.”50 The Commission believes this definition limits the 

exemption to national governments and provides clarity regarding the scope of the counterparties 

whose transactions would be excluded from the Clearing Requirement, as discussed in the 2012 

End-User Exception preamble,51 as well as the counterparties whose transactions are excluded 

by statute from the definition of a swap.52 Under this definition, “sovereign entity” would not 

include state, regional, provincial, or municipal governments.53 The Commission continues to 

believe, as it did in 2012, that most of these entities are predominantly engaged in non-banking 

and non-financial activities related to their core public purposes and functions and therefore are 

not likely to be “financial entities” ineligible to elect an exception from the Clearing 

Requirement under section 2(h)(7)(C) of the CEA.

54 

Request for Comment. The Commission requests comment on the scope of its proposed 

definition of sovereign entity. Should the Commission consider adopting an alternate definition 

for “sovereign entity?” If so, what definition should the Commission consider? Should there be 

 50 As with the proposed definition of “central bank,” the regulation would clarify that the definition of “central 

government” would include the U.S. government. 

51 77 FR at 42562.

52 See section 1a(47)(B)(ix) of the CEA.

53 Accord 77 FR at 42562-63 (“A per se exclusion for state and local government entities from the ‘financial entity’ 

definition is inappropriate.”).

54 Id. at 42562-63 (explaining that the activities of state and local government entities that might be considered to be 

in the business of banking or financial in nature under Section 2(h)(7)(C)(i)(VIII) “are likely to be incidental, not 

primary, activities of those entities.”).
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criteria for determining if transactions with a sovereign entity should be exempt from the 

Clearing Requirement and, if so, what criteria would be appropriate?

3. Proposed Definition of International Financial Institution

Proposed regulation 50.76 would define “international financial institution” to mean the

entities the Commission identified as international financial institutions in the 2012 End-User 

Exception final rule, the entities to whom DCR issued no-action letters in 2013 and 2017,

55 the 

Islamic Development Bank,56 and any other entity that provides financing for national or 

regional development in which the U.S. government is a shareholder or contributing member. 

The Commission believes that an entity may be an international financial institution for 

purposes of an exemption from the Clearing Requirement if it has the following common 

qualities: a significant proportion of the entity’s shareholders are limited to sovereign 

governments or other international financial institutions/multilateral development banks; the 

entity has been granted legal privileges and immunities that are typical of those enjoyed by other 

international financial institutions/multilateral development banks; the entity is governed by 

representatives from the public sector; the entity is a not-for-profit entity whose mission is to 

 55 The proposed list of named entities that would be defined as “international financial institutions” includes: (1) 

African Development Bank; (2) African Development Fund; (3) Asian Development Bank; (4) Banco 

Centroamericano de Integración Económica; (5) Bank for Economic Cooperation and Development in the Middle 

East and North Africa; (6) Caribbean Development Bank; (7) Corporación Andina de Fomento; (8) Council of 

Europe Development Bank; (9) European Bank for Reconstruction and Development; (10) European Investment 

Bank; (11) European Investment Fund; (12) European Stability Mechanism; (13) Inter-American Development 

Bank; (14) Inter-American Investment Corporation; (15) International Bank for Reconstruction and Development;

(16) International Development Association; (17) International Finance Corporation; (18) International Monetary 

Fund; (19) Islamic Development Bank; (20) Multilateral Investment Guarantee Agency; (21) Nordic Investment 

Bank; and (22) North American Development Bank.

56 The Commission is proposing to add the Islamic Development Bank to the current list of international financial 

institutions in an effort to harmonize the exemptions from required clearing with the exemptions from margin for 

uncleared swaps requirements. The Islamic Development Bank is included as a multilateral development bank 

under Commission regulation 23.151, and thus is exempt from margin requirements. In addition, this development 

bank is similarly situated to those entities the Commission identified in the 2012 End-User Exception final rule and 

in DCR no-action letters. 
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foster and promote economic development in developing areas; the entity’s financing is used to 

support activities that are in the public interest, i.e., socioeconomic development projects; the 

entity uses swaps only to hedge credit, interest rate, or currency risk incurred during financing 

activities in support of their public interest missions; swaps are not used for speculative 

purposes; and the entity satisfies other considerations deemed important by the Commission, 

including the public interest. The Commission believes these qualities appropriately describe

international financial institutions for purposes of an exemption from the Clearing Requirement. 

The proposed definition of international financial institution includes a provision “23”

encompassing “any other entity that provides financing for national or regional development in 

which the U.S. government is a shareholder or contributing member.” The Commission believes 

that if the U.S. government is a shareholder or member of an international financial institution 

that provides financing for national or regional development activities that are in the public 

interest, then that entity is an international financial institution that should be exempt from the 

Clearing Requirement. The Commission preliminarily believes that this definition is appropriate 

because it would allow newly established entities meeting this criterion to be included as

international financial institutions enumerated in proposed regulation 50.76. 

In addition, the Commission believes that this proposed rule will encourage international

comity and continued cross-border cooperation with authorities abroad, particularly with EU 

authorities in light of the several EU institutions that would be exempted under the proposed 

rule. An important example of the Commission’s cooperation with EU authorities is the 2016 

announcement by the CFTC and the European Commission regarding requirements for cross-
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border central counterparties.57 The principles of international comity counsel mutual respect for 

the important interests of foreign sovereigns.58 

Request for Comment. Are there additional public interest considerations the 

Commission should consider? Should the factors listed be important in determining eligibility 

for a clearing exemption? Are there additional international financial institutions that should be 

added to the list? The Commission seeks comment regarding this definition. 

4. Proposed Exemption from the Clearing Requirement for Transactions with 

Central Banks, Sovereign Entities, and International Financial Institutions

Proposed regulation 50.75 would exempt from the Clearing Requirement swaps entered 

into with central banks and sovereign entities. Similarly, proposed regulation 50.76 would 

exempt from the Clearing Requirement swaps entered into with international financial 

institutions. Under new proposed regulations 50.75 and 50.76 the swap must be reported to an 

SDR to qualify for the exemption. 

The new proposed regulations 50.75 and 50.76 would codify the Commission’s 

determination that based on considerations of comity and in keeping with the traditions of the 

international system, swaps entered into with central banks (including BIS), sovereign entities, 

and international financial institutions should be treated like swaps entered into with the Federal 

Reserve Banks, the Federal Government, or a Federal agency and should not be subject to the 

 57 On February 10, 2016, the CFTC and the European Commission announced “A Common Approach for 

Transatlantic CCPs.” See Press Release and Related Statements, available at 

https://www.cftc.gov/PressRoom/PressReleases/cftc_euapproach021016. 

58 See Restatement (Third) of Foreign Relations Law of the United States sec. 403 (Am. Law Inst. 2018) (the 

Restatement). The Restatement provides that even where a country has a basis for jurisdiction, it should not 

prescribe law with respect to a person or activity in another country when the exercise of such jurisdiction is 

unreasonable. See Restatement section 403(1). Notably, the Restatement recognizes that, in the exercise of 

international comity, reciprocity is an appropriate consideration in determining whether to exercise jurisdiction 

extraterritorially. 
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Clearing Requirement. The Commission preliminarily believes these entities only use swaps to 

mitigate credit, interest rate, or currency risk incurred during financing activities in support of the 

public interest and the public good. As such, the Commission believes that it is appropriate to 

exclude swaps entered into with these entities from the Clearing Requirement. This exemption 

therefore would allow swaps entered into by these entities to be treated in the same manner as 

the statutory exclusion for a Federal Reserve Bank, the Federal Government, or a Federal agency 

that is backed by the full faith and credit of the United States.59 

Consistent with the other exemptions in effect under current Commission regulation 

50.5,60 new proposed regulations 50.75 and 50.76 would exempt swaps entered into by a central 

bank, a sovereign entity, or an international financial institution from the Clearing Requirement, 

provided that the swap is reported to a swap data repository pursuant to part 45 of the 

Commission’s regulations.61 

Request for Comment. The Commission requests comment on the proposed exemption 

from the Clearing Requirement for swaps entered into with central banks, sovereign entities, and

international financial institutions. The Commission requests comment on the use of swaps by 

central banks, sovereign entities, and international financial institutions, including quantitative 

data where available. 

 59 The Commission is not proposing to exempt these transactions from the definition of a swap. 

60 Under existing Commission regulation 50.5(a), swaps entered into before July 10, 2010, are exempt from the 

clearing requirement under Commission regulation 50.2 if reported to a swap data repository pursuant to section 

2(h)(5)(A) of the CEA and Commission regulation 46.3(a). Existing Commission regulation 50.5(b) exempts swaps 

entered into after July 10, 2010, but before the application of the clearing requirement under Commission 

regulations 50.2 and 50.4 for a particular class of swaps if reported to a swap data repository pursuant to 46.3(a), 

45.3 and 45.4 of the Commission’s regulations.

61 In most instances, the central bank, sovereign entity, or international financial institution would not be the 

reporting counterparty, rather the swap dealer would report the transaction to the SDR.
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B. Data Related to Swaps entered into by Central Banks, Sovereign Entities, and 

International Financial Institutions

The Commission has gathered preliminary data regarding the use of swaps by 

international financial institutions from the Depository Trust & Clearing Corporation’s 

(DTCC’s) swap data repository, DTCC Data Repository (DDR). From January 1, 2018 to 

December 31, 2018, 16 international financial institutions named in proposed regulation 50.76 

were counterparties to a swap that was entered into and reported to DDR during that time period. 

Overall, the 16 international financial institutions entered into approximately 2,500 uncleared 

interest rate swaps with an estimated total notional value of $220 billion. Of the 16 international 

financial institutions, four entered into more than one hundred swaps during calendar year 2018. 

Compared to data that the Commission gathered from DDR during calendar year 2017, the 

number of international financial institutions entering into interest rate swaps increased from 

nine to 16, and the total number and total notional value of all uncleared interest rate swaps 

entered into by the international financial institutions increased from 381 swaps totaling $59.8 

billion to approximately 2,500 swaps totaling $220 billion. 

The Commission is not providing data estimates for swaps entered into by central banks 

and sovereign entities because it believes that the number of such swaps is likely to be small and 

could reveal confidential swaps trading and position information. In addition, it is difficult to 

define a representative set of central banks and sovereign entities for purposes of collecting such 

data. The Commission invites public comment from affected central banks, sovereign entities, 

and their counterparties, including the submission of any data or other relevant information. 

C. New Compliance Schedule for Subpart B
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The Commission implemented the Clearing Requirement through two separate 

rulemakings: (i) the 2012 Clearing Requirement Determination; and (ii) the 2016 Clearing 

Requirement Determination. Under each of these final rules, the Commission made the decision 

to phase-in the compliance requirement. Neither clearing requirement determination required 

compliance by all market participants for all swaps included in Commission regulation 50.4 on a 

single date. 

1. 2012 Clearing Requirement Determination

In order to facilitate an orderly transition to the new swap clearing regime established by 

the Dodd-Frank Act, the Commission decided to phase-in the 2012 Clearing Requirement 

Determination by type of market participant. The Commission adopted a swap clearing 

requirement compliance schedule in Commission regulation 50.25.62 Commission regulation 

50.25 contains definitions for Category 1 Entities and Category 2 Entities,63 as well as other 

terms that are referenced in the implementation section of the 2012 Clearing Requirement 

Determination.64 For all interest rate swaps and CDX credit default swaps that were required to 

be cleared pursuant to the 2012 Clearing Requirement Determination, the applicable 

implementation schedule was published by the Commission in the final rulemaking preamble. 

However, the compliance dates were delayed for iTraxx credit default swaps until February 25, 

2013, because no DCO offered client clearing.

65 Once client clearing was offered for iTraxx 

 62 Swap Transaction Compliance and Implementation Schedule: Clearing Requirement Under Section 2(h) of the 

CEA, 77 FR 44441 (Jul. 30, 2012).

63 Commission regulation 50.25(a). 

64 2012 Clearing Requirement Determination at 74319-21. 

65 CFTC Press Release No. 6521-13 (Feb. 25, 2013), available at 

https://www.cftc.gov/PressRoom/PressReleases/pr6521-13.
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credit default swaps, specified credit default swaps subject to the Clearing Requirement in 

Commission regulation 50.4(b) were required to be cleared after sixty days. This information 

was publicized through Commission press releases, but is not reflected in part 50 of the 

Commission’s regulations.

2. 2016 Clearing Requirement Determination

In 2016, the Commission expanded the set of interest rate swaps subject to the Clearing 

Requirement under Commission regulation 50.4(a) in order to harmonize the CFTC’s swap 

clearing requirement with those in non-U.S. jurisdictions. When the Commission adopted the 

implementation schedule for the 2016 Clearing Requirement Determination, it elected not to 

phase-in compliance by the type of market participant and instead phased-in compliance based 

on when the corresponding non-U.S. jurisdiction’s interest rate swap clearing mandate had gone 

into effect. Under the Commission’s 2016 Clearing Requirement Determination, certain 

categories of interest rate swaps were required to be cleared on the earlier of: (i) 60 calendar 

days after any person was first required to comply with an analogous clearing requirement that 

has been adopted by a regulator in a non-U.S. jurisdiction, or (ii) two years after the final rule 

was published in the Federal Register.

66 All swaps that were subject to the Commission’s 2016 

Clearing Requirement Determination are now required to be cleared and the last compliance date 

for a category of interest rate swaps under Commission regulation 50.4(a) was October 15, 2018. 

As in 2012, the compliance schedule was outlined in the preamble discussion, but the

compliance dates were not published in the final rule.

 

66 Id. at 71227-28.
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In addition, the compliance dates for each category of interest rate swap subject to the 

expansion under the 2016 Clearing Requirement Determination were based on the product type, 

and in some cases, the tenor of the swap. For this reason, the Commission believes that 

publishing the compliance dates in a detailed format will be useful for market participants. 

3. New Proposed Regulation 50.26

The Commission seeks to improve transparency and to provide the information about the 

compliance dates for both of the Commission’s Clearing Requirements in one location that will 

be convenient for market participants to reference. In the new proposed regulation 50.26, the 

Commission has taken information that was available in different formats and repackaged it in a 

single table. Earlier press releases provided small pieces of information but did not provide a 

comprehensive statement of all Clearing Requirement compliance dates. In addition, as detailed 

above, the Commission’s 2016 Clearing Requirement Determination compliance dates were not 

all published in the final rule. Now that all of the swaps covered in Commission regulation 50.4 

have a compliance date, that information can be collected and published in one location in part 

50 of the Commission’s regulations instead of located in various places throughout the Federal 

Register and on the Commission’s website. 

The Commission believes that these compliance dates are static and not subject to 

change. Including a table of compliance dates in the Commission’s regulations will be useful for 

market participants trying to confirm whether their swaps are required to be cleared under the 

Clearing Requirement or would be considered to be legacy swaps not required to be cleared 

under regulation 50.5. This codification may be particularly useful for groups, such as the 
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International Organization of Securities Commissions and others, that collect and disseminate 

such information.67 

Request for Comment. The Commission requests comment on the proposed table 

headings and structure included in Table 1 and Table 2 of new proposed regulation 50.26. Are 

the tables sufficiently clear to communicate the specific dates on which compliance with the 

Clearing Requirement is required? If not, why not? Do market participants think that any 

additional compliance date information should be included in the tables or in this new section? 

D. Technical Amendment to Subpart C for Banks, Savings Associations, Farm Credit 

System Institutions, and Credit Unions

In addition to proposing to codify exemptions from the Clearing Requirement, the 

Commission is proposing technical amendments to subpart C of part 50 to reorganize the subpart 

so that market participants find it easier to read and identify applicable regulations. The 

Commission preliminarily believes that re-codifying the existing regulatory provision for certain 

banks, savings associations, farm credit system institutions, and credit unions (together, small 

financial institutions) with a new numbered section and heading specifically will facilitate swap 

counterparties’ use and understanding of part 50 of the Commission’s regulations.

The current exemption for small financial institutions is located in paragraph (d) of 

Commission regulation 50.50 without any heading or other demarcation. Commission regulation 

50.50 generally excepts non-financial entities from the Clearing Requirement if they satisfy 

certain conditions. In the final paragraph of Commission regulation 50.50, there is a separate 

category of relief for small financial institutions that are exempt from the definition of “financial 

 67 E.g., the International Organization of Securities Commissions’ Information Repository for Central Clearing 

Requirements for OTC Derivatives, available at 

https://www.iosco.org/publications/?subsection=information_repositories. 
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entity” if the financial institution satisfies certain requirements. In order to promote transparency 

about the operation of exceptions and exemptions to the Clearing Requirement, the Commission 

is proposing to separate the small financial institutions exemption from the non-financial entities 

exception. The Commission views this as a non-substantive change, and the minor changes to 

the text of the regulations would serve only to clarify and update the requirements in light of 

current swap reporting conventions, specifically related to SDR reporting by entities eligible for 

an exception or exemption from the Clearing Requirement.

Current Commission regulation 50.50(d) limits the exemption to certain small financial 

institutions with two key definitional requirements. First, the small financial institution must be 

an entity that satisfies the statutory requirements under Commission regulation 50.50(d)(1). 

Second, the small financial institution must have total assets of $10 billion or less on the last day 

of such entity’s most recent fiscal year. The Commission is leaving these requirements 

unchanged and has moved these requirements to new proposed regulation 50.53(a) and 50.53(b), 

respectively. 

New proposed regulation 50.53 will require small financial institutions to satisfy the 

same reporting requirements in Commission regulation 50.50(b) that apply to entities qualifying 

for the exemption under Commission regulation 50.50(d) currently. The Commission believes 

that the language proposed in new regulation 50.53(c) incorporates the requirements under 

Commission regulation 50.50(b) by reference and matches the current structure of a similar 

provision requiring exempt cooperatives to report specific information by reference to 
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Commission regulation 50.50(b).

68 The Commission is proposing a small difference in new 

regulation 50.53(c) that does not match the language in 50.50(b) exactly. Proposed regulation 

50.53(c) would make it clear that rather than “provide” the information to a SDR, the entity 

electing the exception will be expected to “report” the information to a SDR. In a few places in 

the new regulatory text of proposed regulation 50.53(c), the Commission is using the word 

“report” or “cause to be reported” instead of “provide” or “cause to be provided.” The 

Commission believes the words “provide” and “report” have similar meaning, but the word 

“report” is more precise in this instance. The word “report” is the predominant term used under 

Commission regulations in part 45 and this term aligns with the obligations that parties are 

required to comply with under Commission regulations 45.3 and 45.4. Under this proposal, the 

Commission does not intend to alter how swap counterparties currently subject to Commission

regulation 50.50(d) comply with the reporting provisions under existing Commission regulation 

50.50(b). The Commission believes the obligations of banks and other entities eligible for relief 

from the Clearing Requirement under Commission regulation 50.50(d) would not change under 

new proposed regulation 50.53. 

Under Commission regulation 50.50(b) electing entities are given the option to provide 

information to a registered SDR or to provide the information directly to the Commission. The 

Commission believed such flexibility was necessary during the initial implementation phase of 

the Dodd-Frank Act. Now that SDRs have been established and are a reliable infrastructure 

resource, the Commission is proposing to eliminate the option for small financial institutions to 

submit information directly to the Commission. The Commission processes data from the SDRs 

 68 Commission regulation 50.51(c) states that, “[a]n exempt cooperative that elects the exemption provided in this 

section shall comply with the requirements of [Commission regulation] 50.50(b).”
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and uses this data to monitor and track compliance with the Clearing Requirement. This change 

to require reporting of information through an SDR would further the Commission’s goals of 

improving the quality and comprehensiveness of SDR data as well. The Commission notes that 

it is taking this approach to require reporting directly to SDRs (and not to permit reporting 

directly to the Commission) for all of the other exemptions for swaps with certain entities under 

proposed regulations 50.75 – 50.79. The Commission believes that the reporting methods 

employed by small financial institutions currently would satisfy the requirements in proposed 

regulation 50.53(c). 

Finally, proposed regulation 50.53 includes a paragraph (d) that would require small 

financial entities to use the swap to hedge or mitigate commercial risk. This requirement is the 

same as current requirements under Commission regulation 50.50(d) and should not create new 

or different obligations on small financial institutions electing the exemption from the Clearing 

Requirement. The Commission reiterates its view that proposed regulation 50.53 would not 

substantively change the exemption for small financial institutions and is intended to be a 

clarifying amendment to part 50 of the Commission’s regulations. 

Request for Comment. The Commission requests comment on whether the proposed 

changes could materially alter the compliance requirements that exist currently for eligible 

banks, savings associations, farm credit system institutions, and credit unions. 

III. Supplemental Proposal of Proposed Rulemaking for Bank Holding Companies, 

Savings and Loan Holding Companies, and Community Development Financial 

Institutions

A. Background on Prior Proposal and Supplemental Proposal

In August 2018, the Commission proposed regulations that would exempt from the 

Clearing Requirement, set forth in section 2(h)(1) of the CEA, certain swaps entered into by 
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certain bank holding companies, savings and loan holding companies, and CDFIs.69 Under the 

CEA, these entities are not eligible for an exemption from the definition of “financial entity” for 

purposes of an exemption from the Clearing Requirement that is afforded banks, savings 

associations, farm credit systems, and credit unions with total assets of $10 billion or less.70

The proposed amendments to the Commission’s regulations under part 50 would exempt 

from the Clearing Requirement a swap entered into to hedge or mitigate commercial risk if one 

of the counterparties to the swap is either (a) a bank holding company or savings and loan 

holding company, each having no more than $10 billion in consolidated assets, or (b) a CDFI 

transacting in certain types and quantities of interest rate swaps. The proposed amendments 

would codify two no-action letters issued by DCR in 2016.

71 As the Commission noted in the 

2018 Proposal, it believes that codifying both of these staff no-action letters would be consistent 

with the policy rationale behind the exemption from the Clearing Requirement that the 

Commission granted for swaps entered into by banks, savings associations, farm credit 

institutions, and credit unions in the 2012 End-User Exception final rule.

72 

The 2018 Proposal received only one comment on the proposal.73 In light of the 

proposed restructuring of part 50 of the Commission’s regulations, the Commission is requesting 

 69 See 2018 Proposal.

70 See sections 2(h)(1)(A) and 2(h)(7)(A) of the CEA.

71 CFTC Letter No. 16-01 (request from the American Bankers Association) and CFTC Letter No. 16-02 (request 

from a coalition of CDFIs).

72 See 2018 Proposal at 44004. See also End-User Exception Final Rule, 77 FR at 42590-91.

73 American Bankers Association (Oct. 22, 2018). The American Bankers Association supported the 2018 Proposal 

to codify CFTC Letters No. 16-01 and 16-02, and also recommended that the Commission treat all non-swap dealer 

or non-major swap participant banks, bank holding companies, savings associations, and savings and loan holding 

companies as end-users and exempt all of these entities from the Clearing Requirement.
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additional comments on the 2018 Proposal, is proposing minor revisions to the rule text for 

CDFIs, and is proposing technical revisions as described below.

74

B. Changes to the Proposed Rule Text for CDFIs and Technical Revisions to Proposed 

Rule Text for Bank Holding Companies and Savings and Loan Holding Companies

As proposed in August 2018, swaps entered into with certain bank holding companies, 

savings and loan holding companies, and CDFIs would be exempt from the Clearing 

Requirement. The 2018 Proposal would have amended Commission regulation 50.5 by adding 

definitions for CDFI, bank holding company, and savings and loan holding company to 

Commission regulation 50.5(a), and by adding the conditions of the exemption in new subparts 

(e) and (f). In this supplemental proposal, the Commission is proposing to include the 

definitions and exemptions in a new subpart D of part 50 as Commission regulations 50.77, 

50.78, and 50.79 as described further below. 

1. CDFIs

In this supplemental proposal, the Commission is proposing to make the following 

clarifying revisions to the regulations that would exempt certain interest rate swaps and forward 

rate agreements entered into by CDFIs from the Clearing Requirement. First, these regulations, 

if adopted, would be set forth in regulation 50.77 rather than in Commission regulation 50.5. 

Second, the 2018 Proposal’s definition of the term “community development financial 

institution” in proposed regulation 50.5(a) remains unchanged, but would be codified as 

 

74 Procedurally, this supplemental proposal is not a replacement or withdrawal of the 2018 Proposal. Unless 

specifically amended in this release, all regulatory provisions proposed in the 2018 Proposal remain under active 

consideration for adoption as final rules. The Commission welcomes comment on both the 2018 Proposal and this 

supplemental proposal.
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regulation 50.77(a).75 Third, proposed regulation 50.5(f) would become new regulation 

50.77(b). The supplemental proposal would clarify the rule by adding the statutory authority for 

the exemption to the rule text and referencing the subpart. New proposed regulation 50.77(b) 

would read as follows: “A swap entered into by a community development financial institution 

shall not be subject to the clearing requirement of section 2(h)(1)(A) of the [CEA] and this part if

. . ..”

The supplemental proposal includes a technical change to the 2018 Proposal’s reference 

to Commission regulation 50.2 that was included in previously proposed regulation 50.5(f)(2). 

Under the supplemental proposal, newly proposed regulation 50.77(b)(1) would reference 

Commission regulation 50.4(a) and read as follows: “The swap is a U.S. dollar denominated 

interest rate swap in the fixed-to-floating class or the forward rate agreement class of swaps that 

would otherwise be subject to the clearing requirement under 50.4(a) of this part.”

In the 2018 Proposal, under previously proposed regulation 50.5(f)(3), swaps entered into 

by a CDFI would not be subject to the Clearing Requirement of section 2(h)(1)(A) of the CEA, 

and Commission regulation 50.2, if: “the total aggregate notional value of all swaps entered into 

by the community development financial institution during the twelve-month calendar is less 

than or equal to $200,000,000.” To clarify the exemption, the Commission proposes to amend 

the language to read as follows in proposed regulation 50.77(b)(2): “the total aggregate notional 

value of all swaps entered into by the community development financial institution during the 

365 calendar days prior to the day of execution of the swap is less than or equal to 

 75 New proposed regulation 50.77(a) would read as follows: “For the purposes of this section, the term community 

development financial institution means an entity that satisfies the definition in section 103(5) of the Community 

Development Banking and Financial Institutions Act of 1994, and is certified by the U.S. Department of Treasury’s 

Community Development Financial Institution Fund as meeting the requirements set forth in 12 CFR 1805.201(b).”
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36

$200,000,000.” Likewise, previously proposed regulation 50.5(f)(4) would be codified as 

proposed regulation 50.77(b)(3), and the Commission is proposing to include a technical revision 

that changes the time frame from “within a twelve-month calendar year” to “within a period of 

365 calendar days.” The Commission believes both revisions from measuring in months to 

calendar days are more accurate descriptions of the scope of the requirement and is consistent 

with the current requirement in Commission regulation 50.50(b)(2). Commission regulation 

50.50(b)(2) states that reporting for certain entities that are eligible for an exception to the 

Clearing Requirement will remain effective for “365 days following the date of such reporting.” 

The Commission believes this minor technical change will improve internal consistency within 

part 50 of the Commission’s regulations by measuring time periods in days in all relevant places 

rather than using days in some regulations and months in other regulations.

Previously proposed regulation 50.5(f)(1) would remain the same except it would be 

codified in this supplemental proposal as proposed regulation 50.77(b)(4). Previously proposed 

regulation 50.5(f)(5) would be codified by this proposal as proposed regulation 50.77(b)(5) with 

a technical change to the text such that the regulation would change from “the swap is used to 

hedge or mitigate commercial risk, as defined under § 50.50(c) of this part” and would read as 

follows: “The swap is used to hedge or mitigate commercial risk as provided in paragraph (c) of 

§ 50.50.”

2. Bank holding companies and savings and loan holding companies

In this supplemental proposal, the Commission is proposing to have separate regulations 

for exemptions for swaps with bank holding companies and savings and loan holding companies. 

Under the 2018 Proposal, the proposed definitions for a bank holding company and a savings and 

loan holding company were included in existing regulation 50.5(a). This supplemental proposal 
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37

would move the definition for bank holding company to proposed regulation 50.78(a) and 

savings and loan holding company to proposed regulation 50.79(b). 

Previously proposed regulation 50.5(e) would become proposed regulations 50.78(b) for 

bank holding companies and 50.79(b) for savings and loan holding companies. The 

supplemental proposal would clarify the text for each exemption by adding the statutory 

authority for the exemption to the text of the regulation and referencing the subpart. 

This supplemental proposal would renumber previously proposed regulation 50.5(e)(1), 

(2), and (3) as new proposed regulation 50.78(b)(1), (2), and (3) for bank holding companies, and 

new proposed regulation 50.79(b)(1), (2), and (3) for savings and loan holding companies. The 

regulations remain unchanged from the text of the 2018 Proposal with the exception of the 

technical change to paragraph (b)(3) of each proposed regulation. Those paragraphs would now 

read as follows: “The swap is used to hedge or mitigate commercial risk as provided in

paragraph (c) of § 50.50.”

C. Updated Data regarding the Use of Swaps by CDFIs, Bank Holding Companies, and 

Savings and Loan Holding Companies

When the Commission considered its 2018 Proposal, it included data about the number of 

swaps entered into by entities that would be eligible to elect the proposed exemption from the 

Clearing Requirement. The Commission is updating some of the data from DDR that it 

considered in the 2018 Proposal. All interest rate swaps data included in this section was 

reported to DDR as events-based data and was analyzed by Commission staff.76 This 

information about past swaps activity is not used as a predictive measure of future swaps 

 76 This section does not include credit default swaps data because the relief provided to CDFIs does not extend to 

credit default swaps and there has been no credit default swaps activity by eligible bank holding companies or 

savings and loan holding companies in the time periods analyzed.
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activity, but rather, it is included here to provide context about the current use of uncleared 

swaps by the entities discussed in this proposal. 

In the most recent calendar year – between January 1, 2018 and December 31, 2018 –

eight different CDFIs entered into interest rate swaps and four of those entities entered into more 

than one swap. During this one year period, CDFIs entered into thirteen uncleared interest rate 

swaps with an aggregate notional value of almost $84 million. According to this data, more 

CDFIs entered into uncleared interest rate swaps during the calendar year 2018 than during the 

previous 18-month time period between January 2017 and June 2018.77 At the same time, the 

aggregate notional value of all uncleared interest rate swaps entered into during calendar year 

2018 ($83.9 million) was less than the aggregate notional value of swaps entered into by CDFIs 

during the 18-month time period between January 2017 and June 2018 ($251.6 million). 

The Commission is also updating the data regarding the number of swaps entered into by 

eligible bank holding companies and savings and loan holding companies. Between January 1, 

2018 and December 31, 2018, eleven bank holding companies executed 18 interest rate swaps 

with an aggregate notional value of $152.5 million.

78 Seven of these bank holding companies 

entered into more than one swap during the calendar year 2018. In calendar year 2018 the 

aggregate notional value of all swaps entered into by eligible bank holding companies increased 

substantially ($152.5 million in 2018 compared to $68.6 million in 2017), but this increase was 

 77 During an earlier 18-month time period, between January 1, 2017 and June 29, 2018, three CDFIs executed 

interest rate swaps: One executed two swaps with an aggregate notional value of $5.6 million; another executed 

three swaps with an aggregate notional value of $116 million; and another executed three swaps with an aggregate 

notional value of $130 million. 

78 During the previous year, between January 1, 2017 and December 31, 2017, one bank holding company executed 

ten interest rate swaps with an aggregate notional value of $43.6 million, and a second bank holding company 

executed one interest rate swap with a notional value of $25 million.
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also the result of more eligible bank holding companies entering into uncleared interest rate 

swaps. 

The increase in the number of uncleared swaps entered into by these entities may be the 

result of better information and more awareness by eligible entities about the relief provided 

under CFTC Letter Nos. 16-01 and 16-02, or it may be the result of different economic or market 

conditions. The data demonstrates that these entities have an ongoing interest in entering into 

uncleared swaps and likely would benefit from the Commission’s proposal to codify the relief 

currently afforded under CFTC staff letters. 

Request for Comment. The Commission requests comment on all aspects of the new 

proposed regulations, including the specific revisions to the proposed rule text as well as the 

technical amendments to the proposed regulations. In addition, the Commission requests 

additional comment on the use of swaps by CDFIs, bank holding companies, and savings and 

loan holding companies, including quantitative data where available.

IV. Commission’s Section 4(c) Authority

Section 4(c)(1) of the CEA authorizes the Commission to “promote responsible economic 

or financial innovation and fair competition” by exempting any transaction or class of

transactions, including swaps, from any of the provisions of the CEA (subject to exceptions not 

relevant here).79 In enacting CEA section 4(c)(1), Congress noted that the goal of the provision 

 79 Section 4(c)(1) of the CEA provides, in pertinent part: 

In order to promote responsible economic or financial innovation and fair competition, the Commission by 

rule, regulation, or order, after notice and opportunity for hearing, may (on its own initiative or on 

application of any person . . . ) exempt any agreement, contract, or transaction (or class thereof) that is 

otherwise subject to subsection (a) of this section . . . either unconditionally or on stated terms or conditions 

or for stated periods and either retroactively or prospectively, or both, from any of the requirements of 

subsection (a) of this section, or from any other provision of this Act. 
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“is to give the Commission a means of providing certainty and stability to existing and emerging 

markets so that financial innovation and market development can proceed in an effective and 

competitive manner.”80 Section 4(c)(2) of the CEA further provides that the Commission may 

not grant exemptive relief unless it determines that: (A) the exemption is consistent with the 

public interest and the purposes of the CEA; and (B) the transaction will be entered into solely 

between “appropriate persons” and the exemption will not have a material adverse effect on the 

ability of the Commission or any contract market to discharge its regulatory or self-regulatory 

responsibilities under the CEA. 

The Commission believes that it is consistent with the public interest and the purposes of 

the CEA to exempt from the Clearing Requirement swaps entered into with central banks, 

sovereign entities, and international financial institutions, as discussed above. In 2012, the 

Commission stated its view that transactions with central banks, sovereign entities, and certain 

international financial institutions should be exempted from clearing on the basis of comity and 

in keeping with the traditions of the international system. The Commission continues to believe, 

as it did in 2012, that based on canons of statutory construction and considerations of comity,

and in keeping with the traditions of the international system, foreign governments and central 

banks should not be subject to section 2(h)(1) of the CEA.

81 With respect to international 

financial institutions, the member governments generally have majority control and governance 

 

The Commission is proposing to promulgate this exemptive rule pursuant to sections 4(c)(1) and 8a(5) of the CEA.

80 H. R. Rep. No. 102–978, 102d Cong. 2d Sess. at 81 (Oct. 2, 1992), reprinted in 1992 U.S.C.C.A.N. 3179, 3213.

81 The Commission continues to believe that transactions with sovereign wealth funds or similar entities should not 

be exempt from the Clearing Requirement because these entities generally act as investment funds. See 77 FR at 

42562, n.18 (“The foregoing rationale and considerations do not apply to sovereign wealth funds or similar entities 

due to the predominantly commercial nature of their activities.”). 
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over the entities. The Commission therefore continues to believe that an exemption is 

appropriate because in a real sense, an international financial institution is not separable from its 

government owners. Codifying the Commission’s 2012 determination through a section 4(c) 

exemption will provide further clarity to market participants. As with the other exemptions from 

the Clearing Requirement, the Commission reminds the counterparties that these swaps 

exempted from the Clearing Requirement by this proposal and the existing 2012 determination 

must be reported to an SDR. The Commission also believes it is appropriate to exempt swaps 

entered into with international financial institutions because these entities serve an important 

public policy purpose. 

The Commission believes that the specific amendments to exempt swaps entered into by 

central banks, sovereign entities, and certain international financial institutions, as well as the 

previously approved proposal to exempt certain swaps entered into by bank holding companies, 

savings and loan holding companies, and CDFIs from the Clearing Requirement would be 

available to only “appropriate persons.” Section 4(c)(3) of the CEA includes within the term 

“appropriate person” a number of specified categories of persons, including “[a]ny governmental 

entity (including the United States, any state, or any foreign government) or political subdivision 

thereof, or any multinational or supranational entity or any instrumentality, agency, or 

department of any of the foregoing.”82 The Commission preliminarily believes that central 

banks, sovereign entities, and international financial institutions are appropriate persons within 

the scope of section 4(c)(3)(H) of the CEA. The Commission notes that these entities would also 

be considered eligible contract participants (ECPs) as set forth in section 1a(18)(A)(vii) of the 

 82 Section 4(c)(3)(H) of the CEA. 
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CEA. The Commission continues to believe that eligible bank holding companies, savings and 

loan holding companies, and CDFIs are ECPs pursuant to section 1a(18)(A)(i) of the CEA.83 

Given that only ECPs are permitted to enter into uncleared swaps, and that the ECP definition is 

generally more restrictive than the comparable elements of the enumerated “appropriate person” 

definition, there is no risk that a non-ECP or a person who does not satisfy the requirements for 

an “appropriate person” could enter into an uncleared swap using the proposed exemptions from 

the Clearing Requirement. For purposes of this proposal, the Commission believes that the class 

of persons eligible to rely on the proposed exemptions that would be codified in new proposed 

regulations 50.75 – 50.79 will be limited to “appropriate persons” within the scope of section 

4(c) of the CEA. 

The Commission believes that the applicable central banks, sovereign entities, and 

international financial institutions have been relying on the language in the preamble exempting 

their swap transactions from the Clearing Requirement since issuance of the 2012 End-User 

Exception final rule. The Commission is not aware of any increase in counterparty risk 

attributable to affected entities’ reliance on the 2012 Commission determination and the 

subsequent staff no-action letters. The proposed exemptions from the Clearing Requirement are 

limited in scope and, as described further below, the Commission will continue to have access to 

information regarding the swaps subject to this exemption because they will be reported to an 

SDR.84 The Commission notes that the proposed exemptions are intended to be consistent with 

the Commission’s determination set forth in the 2012 End-User Exception final rule and would 

 83 2018 Proposal, at 44008. 

84 The Commission notes that uncleared swaps with a counterparty that is subject to the CEA and Commission 

regulations with regard to such swaps would still be required to comply with the CEA and Commission regulations 

as they pertain to uncleared swaps. 
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not limit the applicability of any CEA provision or Commission regulation to any person or

transaction except as provided in the proposed rulemaking. In addition, the Commission retains 

its special call, anti-fraud, and anti-evasion authorities, which will enable it to adequately 

discharge its regulatory responsibilities under the CEA. The Commission therefore preliminarily 

believes the exemption would not have a material adverse effect on the ability of the 

Commission to discharge its regulatory responsibilities under the CEA. 

For the reasons described in this proposal, the Commission believes it would be 

appropriate and consistent with the public interest to adopt new proposed regulations 50.75, 

50.76, 50.77, 50.78, and 50.79.

Request for Comment. The Commission requests general comments regarding the 

proposal and on whether it should exercise its authority under section 4(c) of the CEA, including 

whether the proposed exemptions promote the public interest. Additionally, the Commission 

requests comment on whether the proposed exemptions provide certainty and stability to existing 

and emerging markets so that financial innovation and market development can proceed in an 

effective and competitive manner. 

V. Proposed Rules Do Not Effect Margin Requirements for Uncleared Swaps

Under Commission regulation 23.150(b)(1), the margin requirements for uncleared swaps 

under part 23 of the Commission’s regulations do not apply to a swap if the counterparty 

“[q]ualifies for an exception from clearing under section 2(h)(7)(A) and implementing 

regulations.”85 Commission regulation 23.150(b) was added to the final margin rules after the 

 85 Commission regulation 23.150(b)(1). 
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Terrorism Risk Insurance Program Reauthorization Act of 2015 (TRIPRA)86 amended section 

731 of the Dodd-Frank Act by adding section 4s(e)(4) to the CEA to provide that the initial and 

variation margin requirements will not apply to an uncleared swap in which a non-financial 

entity (including a small financial institution and a captive finance company) qualifies for an 

exception under section 2(h)(7)(A) of the CEA, as well as two exemptions from the clearing 

requirement that are not relevant in this context.87 

The proposed rules are not implementing section 2(h)(7)(A) of the CEA. The 

Commission, pursuant to its 4(c) authority (as discussed above), is proposing to exempt swaps 

entered into by central banks, sovereign entities, and international financial institutions, as well 

as eligible bank holding companies, savings and loan holding companies, and CDFIs from the 

Clearing Requirement. The Commission is not proposing to exclude these entities from the 

“financial entity” definition of section 2(h)(7)(C) of the CEA. 

For the reasons stated above, the new proposed rules 50.75 – 50.79 do not implicate any 

of the provisions of section 4s(e)(4) of the CEA or Commission regulation 23.150.88 

VI. Related Matters

A. Regulatory Flexibility Act

 86 Pub. L. 114-1, 129 Stat. 3.

87 Commission regulation 23.150(b)(2) provides that certain cooperative entities that are exempt from the 

Commission’s clearing requirement pursuant to section 4(c)(1) authority also are exempt from the initial and 

variation margin requirements. None of the entities included in this proposal is a cooperative that would meet the 

conditions in Commission regulation 23.150(b)(2). In addition, the regulation 23.150(b)(3), which pertains to 

affiliated entities, does not apply in this context. 

88 The Commission believes that the proposed rules do not affect the margin rules for entities that are supervised by 

the prudential regulators. The prudential regulators’ rules contain provisions that are identical to Commission 

regulation 23.150. See Margin and Capital Requirements for Covered Swap Entities, 80 FR 74916, 74923 (Nov. 20, 

2015).
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The Regulatory Flexibility Act (RFA) requires federal agencies to consider whether the 

regulations they propose will have a significant economic impact on a substantial number of 

small entities and, if so, provide a regulatory flexibility analysis on the impact.89 The 

Commission previously has established certain definitions of small entities to be used in 

evaluating the impact of its regulations on small entities in accordance with the RFA.90 The 

proposed regulations would not affect any small entities as that term is used in the RFA. The 

proposed rule would affect specific counterparties to an uncleared swap: central banks, 

sovereign entities, and international financial institutions. Sections 2(e) and 5(d)(11)(A) of the 

CEA provide that only ECPs may enter into uncleared swaps.91 The Commission has previously 

stated that ECPs, by the nature of the definition, should not be considered small entities for RFA 

purposes.92 Because ECPs are not small entities, and persons not meeting the definition of ECP 

may not conduct transactions in uncleared swaps, the Commission need not conduct a regulatory 

flexibility analysis respecting the effect of these proposed rules on ECPs. 

Accordingly, the Chairman, on behalf of the Commission, hereby certifies pursuant to 

5 U.S.C. 605(b) that the proposed regulations will not have a significant economic impact on a 

substantial number of small entities. 

B. Paperwork Reduction Act

 89 5 U.S.C. 601 et seq.

90 47 FR 18618 (Apr. 30, 1982).

91 Section 2(e) of the CEA limits non-ECPs to executing swap transactions on DCMs and section 5(d)(11)(A) of the 

CEA requires all DCM transactions to be cleared. Accordingly, the two provisions read together only permit ECPs 

to execute uncleared swap transactions.

92 See 66 FR 20740, 20743 (Apr. 25, 2001).
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The Paperwork Reduction Act of 1995 (PRA) 93 imposes certain requirements on Federal 

agencies, including the Commission, in connection with their conducting or sponsoring any 

collection of information, as defined by the PRA. This proposed rulemaking would not impose a 

new collection of any information or any new recordkeeping requirements from any persons or 

entities and would not require approval of the Office of Management and Budget (OMB) under 

the PRA.94 The Commission invites public comment on its determination that no additional 

recordkeeping or information collection requirements, or changes to existing collection 

requirements, would result from the proposed rulemaking.

C. Cost-Benefit Considerations

1. Statutory and Regulatory Background

Section 15(a) of the CEA requires the Commission to consider the costs and benefits of 

its actions before promulgating a regulation under the CEA or issuing certain orders.95 Section 

15(a) further specifies that the costs and benefits shall be evaluated in light of the following five 

broad areas of market and public concern: (1) protection of market participants and the public; 

(2) efficiency, competitiveness, and financial integrity; (3) price discovery; (4) sound risk 

management practices; and (5) other public interest considerations (collectively referred to 

herein as the Section 15(a) Factors). 

 93 44 U.S.C. 3501 et seq.

94 The applicable collection of information is “Swap Data Recordkeeping and Reporting Requirements,” OMB 

control number 3038-0096. Parties wishing to review the CFTC’s information collections may do so at 

www.reginfo.gov, at which OMB maintains an inventory aggregating each of the CFTC’s currently approved 

information collections, as well as the information collections that presently are under review.

95 Section 15(a) of the CEA.
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The baseline for the Commission’s consideration of the costs and benefits of this 

proposed rulemaking is the existing statutory and regulatory framework under which any swap 

subject to the Clearing Requirement would be required to be cleared by central banks, sovereign 

entities, and international financial institutions. As a practical matter, however, the regulatory 

baseline has been affected by Commission action and staff no-action relief such that central 

banks, sovereign entities, international financial institutions, and their counterparties have relied 

on Commission statements in the 2012 End-User Exception final rule and staff no-action relief 

when entering into swaps that otherwise would be subject to the Clearing Requirement. 

This proposal would codify current practice by exempting certain swaps with central 

banks (including BIS), sovereign entities, and international financial institutions from the 

Clearing Requirement. The Commission believes that the entities whose swaps would be 

exempted by this proposing release are the same entities governed by the determination set forth 

in the 2012 End-User Exception final rule and the entities that received staff no-action relief.96 

Consequently, the Commission expects that the actual costs and benefits of the proposed rule, as 

realized in the market, may not be as significant as compared to the baseline. 

The Commission notes that this proposal would not change the eligibility to enter into 

uncleared swaps for any entity that has been relying on the 2012 End-User Exception final rule 

determination and has not been clearing swaps subject to the Clearing Requirement. Entities 

named in the 2012 End-User Exception final rule97 may continue to rely on the Commission’s 

 96 The one modification to the proposed list is to include the Islamic Development Bank as an additional entity that 

would be eligible for the exemption under proposed regulation 50.76(b). The Islamic Development Bank is not 

subject to the Commission’s margin requirements for uncleared swaps.

97 77 FR at 42561-62 n.14.
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statement that they are not subject to section 2(h)(1) of the CEA and may choose not to clear a 

swap subject to the Clearing Requirement. The Commission has endeavored to assess the 

expected costs and benefits of the proposed rule in quantitative terms where possible. Where 

estimation or quantification is not feasible, the Commission has provided its discussion in 

qualitative terms.

The Commission notes that the consideration of costs and benefits below is based on the 

understanding that the markets function internationally, with many transactions involving U.S. 

firms taking place across international boundaries; with some Commission registrants being 

organized outside of the United States; with leading industry members typically conducting 

operations both within and outside the United States; and with industry members commonly 

following substantially similar business practices wherever located. Where the Commission 

does not specifically refer to matters of location, the below discussion of costs and benefits refers 

to the effects of the proposed rule on all activity subject to the proposed and amended 

regulations, whether by virtue of the activity’s physical location in the United States or by virtue 

of the activity’s connection with or effect on U.S. commerce under section 2(i) of the CEA.

98 In 

particular, the Commission notes that some entities affected by this proposed rulemaking are 

located outside of the United States.

In the sections that follow, the Commission considers: (1) the costs and benefits of the 

exemption to the Clearing Requirement for entities that meet the definitions of central bank, 

sovereign entity, and international financial institution, as identified in this proposed rule; and (2) 

 98 Section 2(i) of the CEA.
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the impact of the exemption for central banks, sovereign entities, and international financial 

institutions on the Section 15(a) Factors. 

The Commission is incorporating by reference the costs and benefits of the supplemental 

proposal to exempt swaps entered into by certain bank holding companies, savings and loan 

holding companies, and CDFIs.

99

2. Consideration of the Costs and Benefits of the Commission’s Action

a. Costs

New proposed regulations 50.75 and 50.76 would exempt swaps entered into with central 

banks, sovereign entities, and certain international financial institutions from the Clearing 

Requirement. By exempting transactions with central banks, sovereign entities, and international 

financial institutions from the Clearing Requirement, the Commission recognizes that the 

benefits of central clearing will not accrue to swaps entered into by these entities. However, as 

discussed above, Congress exempted swaps with the Federal Reserve Banks, the Federal 

Government, and Federal agencies expressly backed by the full faith and credit of the United 

States by excluding any agreement, contract, or transaction entered into by these entities from the 

definition of a swap and consequently from the Clearing Requirement.100 The proposed 

amendments to part 50 of the Commission’s regulations would codify the Commission’s 2012 

 99 The Commission notes that the costs and benefits of the proposed changes in the 2018 Proposal were discussed in 

that release and remain under active consideration by the Commission. As the Commission noted in the 2018 

Proposal, bank holding companies, savings and loan holding companies, and CDFIs are likely to have limited swap 

exposure, in terms of value and number of swaps. These entities would have relatively modest contributions to 

systemic risk and are expected to have some degree of protection against default because they would be required to 

indicate how they will meet financial obligations associated with uncleared swaps. Bank holding companies and 

savings and loan holding companies will benefit from an exemption from the Clearing Requirement through internal 

accounting efficiencies and all of the entities would benefit from the cost savings of not having to clear a swap. See 

2018 Proposal at 44009-11.

100 Section 1a(47)(B)(ix) of the CEA.
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End-User Exception final rule determination that based on considerations of comity, and in 

keeping with the traditions of the international system, swaps entered into with certain central 

banks (including BIS), sovereign entities, and international financial institutions should be 

treated like swaps entered into with the Federal Reserve Banks, the Federal Government, or a 

Federal agency and should not be subject to the Clearing Requirement.

The primary cost of the proposed amendments is, therefore, that swaps entered into with 

central banks, sovereign entities, and international financial institutions would not be subject to 

the Clearing Requirement. 

In general, the principal risk to the financial system that central clearing seeks to address 

is counterparty credit risk. A DCO manages this risk by collecting initial and variation margin 

from its clearing members. The collection of margin allows a DCO to mitigate the possibility of

a default, and to cover the losses due to default of a clearing member in many cases. By 

exempting transactions with these entities from the Clearing Requirement, the Commission 

recognizes that the risk-mitigating benefits of clearing will not attach to those transactions. In 

addition, the Commission is also aware that some of these entities may be covered under the 

Commission’s uncleared margin requirements. In that case, the cost that may result from not 

requiring clearing these transactions may be mitigated. To the extent that these entities do not 

pay margin, there is a possibility of increased counterparty risk. 

Request for Comment. The Commission requests comment, including any available 

quantitative data and analysis, on the risks resulting from the proposed amendment to the 

Clearing Requirement. 

b. Benefits
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Set against these costs are the benefits of allowing these entities to enter into swaps at a 

potentially lower cost. Specifically, the Commission believes that central banks (including BIS), 

sovereign entities, and international financial institutions would benefit from an exemption 

because project financing and risk management transactions with these entities would not be 

subject to required clearing or have the added expense of required clearing. The Commission 

believes that the cost savings achieved through an exemption from the Clearing Requirement 

would allow these entities to enter into more public service projects in furtherance of their 

missions.

The Commission believes there is an important benefit associated with the proposed 

amendments. If foreign governments (sovereign entities), central banks, or international 

financial institutions of which foreign governments are a member were subjected to regulation 

by the Commission in connection with their swaps, foreign regulators could treat the Federal 

Government, Federal Reserve Banks, or international financial institutions of which the United 

States is a member in a similar manner. The Commission expects that the proposed exemption 

from the Clearing Requirement will mean that if any of the Federal Government, Federal 

Reserve Banks, or international financial institutions of which the United States is a member 

were to engage in swaps in foreign jurisdictions, the actions of those entities with respect to 

those transactions would not be subject to foreign regulation. By allowing swaps entered into 

with central banks (including BIS), sovereign entities, and international financial institutions to 

be treated like swaps entered into with the Federal Reserve Banks, the Federal Government, and 
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Federal agencies, the Commission is facilitating similar treatment for transactions by foreign 

regulators.101 

The Commission believes that most of the central banks, sovereign entities, and 

international financial institutions that would benefit from the proposed regulations would 

benefit from relief from the uncleared margin requirements under part 23 of the Commission’s 

regulations, as well. For entities that would be required to comply with the Commission’s 

uncleared margin requirements, their benefit from an exemption would be mitigated. Actual 

benefits may be less than expected if counterparties to eligible swaps by central banks, sovereign 

entities, and international financial institutions choose to voluntarily clear the swaps instead of 

electing an exemption from the Clearing Requirement.

As a practical matter, we believe that the entities for which the proposed rule would apply 

currently are not clearing all of their swaps subject to the Clearing Requirement.102 In that 

regard, the practical effect of the proposed exception is to provide regulatory certainty. The 

Commission believes that regulatory certainty would reduce the legal costs faced by these 

entities. 

Request for Comment. The Commission requests comment on the benefits, such as the 

expected cost savings to these entities, of codifying the Commission’s determination and staff 

no-action relief that swaps entered into with central banks, sovereign entities, or international 

financial institutions should be exempt from the Clearing Requirement.

 101 See 77 FR at 42562.

102 The Commission reviewed data from January 1, 2018 to December 31, 2018 that was reported to DDR and found 

that 16 international financial institutions entered into approximately 2,500 uncleared interest rate swaps with an 

estimated total notional value of $220 billion. Three international financial institutions elected to clear a portion of 

their interest rate swaps. 
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3. Section 15(a) Factors

The discussion that follows supplements the related cost and benefit considerations 

addressed in the preceding section and addresses the overall effect of the proposed rule in terms 

of the factors set forth in section 15(a) of the CEA.

a. Protection of Market Participants and the Public

Section 15(a)(2)(A) of the CEA requires the Commission to evaluate the costs and 

benefits of a proposed regulation in light of considerations of protection of market participants 

and the public. The Commission considers the costs and benefits of the proposed exemption 

from the Clearing Requirement in light of its responsibility for determining which swaps should

be required to be cleared. In recognition of the significant risk-mitigating benefits of central

clearing, Congress amended the CEA to direct the Commission review all swaps that are offered 

for clearing by DCOs to determine whether such swaps should be required to be cleared. In 

developing the proposed rule, the Commission was cognizant that in enacting the Dodd-Frank 

Act, Congress excluded from the definition of a swap any agreement, contract, or transaction 

wherein the counterparty is a Federal Reserve Bank, the Federal Government, or a Federal 

agency that is expressly backed by the full faith and credit of the United States. In so doing, 

Congress determined that swaps with the Federal Reserve Banks, the Federal Government, and 

Federal agencies are not subject to the Clearing Requirement. Under this proposal, the 

Commission would be extending similar treatment for swap transactions with central banks and 

sovereign entities, as discussed above. 

The Commission notes that the proposed exemption from the Clearing Requirement 

means that counterparties entering into swaps with certain entities would not have the protection 

afforded by central clearing through posting initial margin, daily variation margin payments, and 
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other types of collateralization and risk mitigation associated with central clearing. The 

Commission, however, believes Congress would not have excluded the swaps entered into by the 

Federal Reserve Bank, the Federal Government, and Federal agencies from the definition of a 

swap if such transactions would pose a significant risk to market participants and the public. In 

proposing a similar exemption from the Clearing Requirement for swaps with central banks and 

sovereign entities, as discussed above, the Commission is applying a similar rationale.

As discussed above, the Commission believes that international comity would support 

similar regulatory treatment for swap transactions with central banks, sovereign entities, and 

international financial institutions. The Commission preliminarily believes these entities 

generally enter into limited swap transactions in support of their public interest missions. As 

such, while an exemption from the Clearing Requirement does result in reduced protection for 

counterparties, the Commission believes that the exemption for transactions with these entities 

would not pose a significant risk to market participants and the public. 

b. Efficiency, Competitiveness, and Financial Integrity of Swap Markets

Section 15(a)(2)(B) of the CEA requires the Commission to evaluate the costs and 

benefits of a proposed regulation in light of efficiency, competitiveness, and financial integrity 

considerations. The Commission believes that proposed regulations 50.75 and 50.76 would 

lower the cost of using swaps for central banks, sovereign entities, and international financial 

institutions, and in that sense, make trading more efficient. A potential effect of the proposal 

would be to increase liquidity in swap markets, as entering into swaps would be less costly and 

these entities may engage in increased trading, which may in turn potentially improve the 

competitiveness of swaps markets for all participants. The Commission notes that to the extent 

that transactions with these counterparties are currently not cleared because of reliance on the 
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Commission statements made in the 2012 End-User Exception final rule and DCR no-action 

letters, the impact of the proposed exemption on the efficiency, competitiveness, and financial 

integrity of the swap markets may be mitigated.

c. Price Discovery

Section 15(a)(2)(C) of the CEA requires the Commission to evaluate the costs and 

benefits of a proposed regulation in light of price discovery considerations. The Commission 

preliminarily believes that the proposed rule would not have a significant impact on price 

discovery. Typically more liquidity supports greater price discovery as more participants enter 

the market and/or more trading occurs. To the extent that markets become more liquid, price 

discovery could improve. In regard to transparency of prices, swap transactions, whether cleared 

or uncleared and regardless of the counterparty, are required by section 2(a)(13)(G) of the CEA 

to be reported to a swap data repository. 

d. Sound Risk Management Practices

Section 15(a)(2)(D) of the CEA requires the Commission to evaluate the costs and 

benefits of a proposed regulation in light of sound risk management practices. The Commission 

believes that by eliminating the costs associated with clearing for central banks, sovereign 

entities, and international financial institutions, the Commission is facilitating the use of swaps 

by these entities. To the extent that these entities use swaps to hedge existing risk, then the 

Commission preliminarily believes the proposed exemption from the clearing requirement will 

enable better risk management. 

e. Other Public Interest Considerations

Section 15(a)(2)(E) of the CEA requires the Commission to evaluate the costs and 

benefits of a proposed regulation in light of other public interest considerations. As discussed 
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above, the Commission believes that public interest and international comity support the 

exemption from the Clearing Requirement for swaps with central banks, sovereign entities, and 

international financial institutions. The Commission believes that the public interest mission of 

these entities will be served by lowering the cost of financing in support of their public interest 

missions. The Commission requests comment on other public interest considerations raised by 

the proposed exemption from the Clearing Requirement for swaps with central banks, sovereign 

entities, and international financial institutions. 

D. General Request for Comment

The Commission requests comment on all aspects of the costs and benefits relating to the 

proposed exemption of these transactions from the Clearing Requirement. The Commission 

requests that commenters provide any data or other information that would be useful in 

estimating the quantifiable costs and benefits of this rulemaking. 

E. Antitrust Considerations

Section 15(b) of the Act requires the Commission to “take into consideration the public 

interest to be protected by the antitrust laws and endeavor to take the least anticompetitive means 

of achieving the objectives of this Act, as well as the policies and purposes of this Act, in issuing 

any order or adopting any Commission rule or regulation (including any exemption under section 

4(c) or 4c(b)), or in requiring or approving any bylaw, rule, or regulation of a contract market or 

registered futures association established pursuant to section 17 of this Act.”103 The Commission 

believes that the public interest to be protected by the antitrust laws is generally to protect 

 103 Section 15(b) of the CEA.
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competition. The Commission requests comment on whether the proposal implicates any other 

specific public interest to be protected by the antitrust laws.

The Commission has considered the proposal to determine whether it is anticompetitive 

and has preliminarily identified no anticompetitive effects. The Commission requests comment 

on whether the proposal is anticompetitive and, if it is, what the anticompetitive effects are. 

Because the Commission has preliminarily determined that the proposal is not 

anticompetitive and has no anticompetitive effects, the Commission has not identified any less 

anticompetitive means of achieving the purposes of the Act. The Commission requests comment 

on whether there are less anticompetitive means of achieving the relevant purposes of the Act 

that would otherwise be served by adopting the proposal.

List of subjects in 17 CFR Part 50

Business and industry, Clearing, Cooperatives, Reporting requirements, Swaps

For the reasons discussed in the preamble, the Commodity Futures Trading Commission 

proposes to amend 17 CFR chapter I as set forth below:

PART 50 – CLEARING REQUIREMENT AND RELATED RULES

1. The authority citation for part 50 continues to read as follows:

Authority: 7 U.S.C. 2(h), 6(c), and 7a-1 as amended by Pub. L. 111-203, 124 Stat. 1376.

2. Revise subpart B and add §50.26 to read as follows:

Subpart B – CLEARING REQUIREMENT COMPLIANCE SCHEDULE AND 

COMPLIANCE DATES.

* * * * *

§ 50.26 Swap clearing requirement compliance dates.
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(a) Compliance dates for interest rate swap classes. The compliance dates for swaps that are 

required to be cleared under §50.4(a) are specified in the table below.

Table 1

Swap Asset Class Swap Class Subtype Currency and 

Floating Rate 

Index

Stated Termination 

Date Range

Clearing Requirement 

Compliance Date

Interest Rate Swap Fixed-to-Floating Euro (EUR)

EURIBOR

28 days to 50 years Category 1 entities 

March 11, 2013

All non-Category 2 entities

June 10, 2013

Category 2 entities

September 9, 2013

Interest Rate Swap Fixed-to-Floating Sterling (GBP)

LIBOR

28 days to 50 years Category 1 entities 

March 11, 2013

All non-Category 2 entities

June 10, 2013

Category 2 entities

September 9, 2013

Interest Rate Swap Fixed-to-Floating U.S. Dollar 

(USD) LIBOR

28 days to 50 years Category 1 entities 

March 11, 2013

All non-Category 2 entities

June 10, 2013

Category 2 entities

September 9, 2013

Interest Rate Swap Fixed-to-Floating Yen (JPY)

LIBOR

28 days to 50 years Category 1 entities 

March 11, 2013

All non-Category 2 entities

June 10, 2013

Category 2 entities

September 9, 2013

Interest Rate Swap Fixed-to-Floating Australian Dollar 

(AUD)

BBSW

28 days to 30 years All entities

December 13, 2016

Interest Rate Swap Fixed-to-Floating Canadian Dollar 

(CAD)

CDOR

28 days to 30 years All entities

July 10, 2017

Interest Rate Swap Fixed-to-Floating Hong Kong 

Dollar (HKD)

HIBOR

28 days to 10 years All entities

August 30, 2017

Interest Rate Swap Fixed-to-Floating Mexican Peso 

(MXN)

TIIE-BANXICO

28 days to 21 years All entities

December 13, 2016

Interest Rate Swap Fixed-to-Floating Norwegian 

Krone (NOK)

NIBOR

28 days to 10 years All entities

April 10, 2017

Interest Rate Swap Fixed-to-Floating Polish Zloty 

(PLN)

WIBOR

28 days to 10 years All entities

April 10, 2017

Interest Rate Swap Fixed-to-Floating Singapore Dollar 28 days to 10 years All entities
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(SGD)

SOR-VWAP

October 15, 2018

Interest Rate Swap Fixed-to-Floating Swedish Krona 

(SEK)

STIBOR

28 days to 15 years All entities

April 10, 2017

Interest Rate Swap Fixed-to-Floating Swiss Franc 

(CHF)

LIBOR

28 days to 30 years All entities

October 15, 2018

Interest Rate Swap Basis Euro (EUR)

EURIBOR

28 days to 50 years Category 1 entities 

March 11, 2013

All non-Category 2 entities

June 10, 2013

Category 2 entities

September 9, 2013

Interest Rate Swap Basis Sterling (GBP)

LIBOR

28 days to 50 years Category 1 entities 

March 11, 2013

All non-Category 2 entities

June 10, 2013

Category 2 entities

September 9, 2013

Interest Rate Swap Basis U.S. Dollar 

(USD) LIBOR

28 days to 50 years Category 1 entities 

March 11, 2013

All non-Category 2 entities

June 10, 2013

Category 2 entities

September 9, 2013

Interest Rate Swap Basis Yen (JPY)

LIBOR

28 days to 30 years Category 1 entities 

March 11, 2013

All non-Category 2 entities

June 10, 2013

Category 2 entities

September 9, 2013

Interest Rate Swap Basis Australian Dollar 

(AUD)

BBSW

28 days to 30 years All entities

December 13, 2016

Interest Rate Swap Forward Rate Agreement Euro (EUR)

EURIBOR

3 days to 3 years Category 1 entities 

March 11, 2013

All non-Category 2 entities

June 10, 2013

Category 2 entities

September 9, 2013

Interest Rate Swap Forward Rate Agreement Sterling (GBP)

LIBOR

3 days to 3 years Category 1 entities 

March 11, 2013

All non-Category 2 entities

June 10, 2013

Category 2 entities

September 9, 2013

Interest Rate Swap Forward Rate Agreement U.S. Dollar 

(USD) LIBOR

3 days to 3 years Category 1 entities 

March 11, 2013

All non-Category 2 entities

June 10, 2013

Category 2 entities

September 9, 2013
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Interest Rate Swap Forward Rate Agreement Yen (JPY)

LIBOR

3 days to 3 years Category 1 entities 

March 11, 2013

All non-Category 2 entities

June 10, 2013

Category 2 entities

September 9, 2013

Interest Rate Swap Forward Rate Agreement Polish Zloty 

(PLN)

WIBOR

3 days to 2 years All entities

April 10, 2017

Interest Rate Swap Forward Rate Agreement Norwegian 

Krone (NOK)

NIBOR

3 days to 2 years All entities

April 10, 2017

Interest Rate Swap Forward Rate Agreement Swedish Krona 

(SEK)

STIBOR

3 days to 3 years All entities

April 10, 2017

Interest Rate Swap Overnight Index Swap Euro (EUR)

EONIA

7 days to 2 years Category 1 entities 

March 11, 2013

All non-Category 2 entities

June 10, 2013

Category 2 entities

September 9, 2013

2 years + 1 day to 3 

years

All entities

December 13, 2016

Interest Rate Swap Overnight Index Swap Sterling (GBP)

SONIA

7 days to 2 years Category 1 entities 

March 11, 2013

All non-Category 2 entities

June 10, 2013

Category 2 entities

September 9, 2013

2 years + 1 day to 3 

years

All entities

December 13, 2016

Interest Rate Swap Overnight Index Swap U.S. Dollar 

(USD) 

FedFunds

7 days to 2 years Category 1 entities 

March 11, 2013

All non-Category 2 entities

June 10, 2013

Category 2 entities

September 9, 2013

2 years + 1 day to 3 

years

All entities

December 13, 2016

Interest Rate Swap Overnight Index Swap Australian Dollar 

(AUD)

AONIA-OIS

7 days to 2 years All entities

December 13, 2016

Interest Rate Swap Overnight Index Swap Canadian Dollar 

(CAD)

CORRA-OIS

7 days to 2 years All entities

July 10, 2017

(b) Compliance dates for credit default swap classes. The compliance dates for swaps that are 

required to be cleared under §50.4(b) are specified in the table below.
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Table 2

Swap Asset Class Swap Class Subtype Indices Tenor Clearing Requirement 

Compliance Date

Credit Default Swap North American 

untranched CDS indices

CDX.NA.IG 3Y, 5Y, 7Y, 10Y Category 1 entities 

March 11, 2013

All non-Category 2 entities

June 10, 2013

Category 2 entities

September 9, 2013

Credit Default Swap North American 

untranched CDS indices

CDX.NA.HY 5Y Category 1 entities 

March 11, 2013

All non-Category 2 entities

June 10, 2013

Category 2 entities

September 9, 2013

Credit Default Swap European untranched CSD 

indices

iTraxx Europe 5Y, 10Y Category 1 entities

April 26, 2013

Category 2 entities

July 25, 2013

All non-Category 2 entities

October 23, 2013

Credit Default Swap European untranched CSD 

indices

iTraxx Europe 

Crossover

5Y Category 1 entities

April 26, 2013

Category 2 entities

July 25, 2013

All non-Category 2 entities

October 23, 2013

Credit Default Swap European untranched CSD 

indices

iTraxx Europe 

HiVol

5Y Category 1 entities

April 26, 2013

Category 2 entities

July 25, 2013

All non-Category 2 entities

October 23, 2013

3. Revise subpart C to read as follows:

Subpart C – EXCEPTIONS AND EXEMPTIONS FROM THE CLEARING 

REQUIREMENT

§50.50 Non-financial end-user exception to the clearing requirement.

* * * * * 

(d) [Repealed and reserved.]

§50.51 Cooperatives exempt from the clearing requirement.
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* * * * * 

§50.52 Affiliated entities exempt from the clearing requirement.

* * * * *

4. Add §50.53 to read as follows:

§50.53 Banks, savings associations, farm credit system institutions, and credit unions 

exempt from the clearing requirement.

For purposes of section 2(h)(7)(A) of the Act, a person that is a “financial entity” solely because 

of section 2(h)(7)(C)(i)(VIII) shall be exempt from the definition of “financial entity” and is 

eligible to elect the exception to the clearing requirement under §50.50, if such person: 

(a) Is organized as a bank, as defined in section 3(a) of the Federal Deposit Insurance Act, the 

deposits of which are insured by the Federal Deposit Insurance Corporation; a savings 

association, as defined in section 3(b) of the Federal Deposit Insurance Act, the deposits of 

which are insured by the Federal Deposit Insurance Corporation; a farm credit system institution 

chartered under the Farm Credit Act of 1971; or an insured Federal credit union or Statechartered credit union under the Federal Credit Union Act; and

(b) Has total assets of $10,000,000,000 or less on the last day of such person’s most recent fiscal 

year; 

(c) Reports, or causes to be reported, the swap to a swap data repository pursuant to §§45.3 and 

45.4 of this chapter, and reports, or causes to be reported, all information as provided in 

paragraph (b) of §50.50 to a swap data repository; and

(d) Is using the swap to hedge or mitigate commercial risk as provided in paragraph (c) of 

§50.50. 

5. Add subpart D to read as follows:
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Subpart D – SWAPS NOT SUBJECT TO THE CLEARING REQUIREMENT.

§50.75 Swaps entered into by central banks or sovereign entities.

Swaps entered into by a central bank or sovereign entity shall be exempt from the clearing 

requirement of section 2(h)(1)(A) of the Act and this part if reported to a swap data repository 

pursuant to §§ 45.3 and 45.4 of this chapter.

(a) For the purposes of this section, the term central bank means a reserve bank or monetary 

authority of a central government (including the Board of Governors of the Federal Reserve 

System or any of the Federal Reserve Banks) or the Bank for International Settlements.

(b) For the purposes of this section, the term sovereign entity means a central government 

(including the U.S. government), or an agency, department, or ministry of a central government.

§50.76 Swaps entered into by international financial institutions. 

(a) Swaps entered into by an international financial institution shall be exempt from the clearing 

requirement of section 2(h)(1)(A) of the Act and this part if reported to a swap data repository 

pursuant to §§ 45.3 and 45.4 of this chapter.

(b) For purposes of this section, the term international financial institution means:

(1) African Development Bank;

(2) African Development Fund; 

(3) Asian Development Bank;

(4) Banco Centroamericano de Integración Económica;

(5) Bank for Economic Cooperation and Development in the Middle East and North Africa;

(6) Caribbean Development Bank;

(7) Corporación Andina de Fomento;
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(8) Council of Europe Development Bank;

(9) European Bank for Reconstruction and Development;

(10) European Investment Bank;

(11) European Investment Fund;

(12) European Stability Mechanism;

(13) Inter-American Development Bank;

(14) Inter-American Investment Corporation;

(15) International Bank for Reconstruction and Development;

(16) International Development Association;

(17) International Finance Corporation;

(18) International Monetary Fund;

(19) Islamic Development Bank;

(20) Multilateral Investment Guarantee Agency;

(21) Nordic Investment Bank; 

(22) North American Development Bank; and

(23) Any other entity that provides financing for national or regional development in which the 

U.S. government is a shareholder or contributing member.

§50.77 Interest rate swaps entered into by community development financial institutions. 

(a) For the purposes of this section, the term community development financial institution means 

an entity that satisfies the definition in section 103(5) of the Community Development Banking 

and Financial Institutions Act of 1994, and is certified by the U.S. Department of the Treasury’s 

Community Development Financial Institution Fund as meeting the requirements set forth in 12 

CFR 1805.201(b).
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(b) A swap entered into by a community development financial institution shall not be subject to 

the clearing requirement of section 2(h)(1)(A) of the Act and this part if: 

(1) The swap is a U.S. dollar denominated interest rate swap in the fixed-to-floating class or the 

forward rate agreement class of swaps that would otherwise be subject to the clearing 

requirement under §50.4(a) of this part; 

(2) The total aggregate notional value of all swaps entered into by the community development 

financial institution during the 365 calendar days prior to the day of execution of the swap is less 

than or equal to $200,000,000; 

(3) The swap is one of ten or fewer swap transactions that the community development financial 

institution enters into within a period of 365 calendar days; 

(4) One of the counterparties to the swap reports the swap to a swap data repository pursuant to 

§§45.3 and 45.4 of this chapter, and reports all information as provided in paragraph (b) of 

§50.50 to a swap data repository; and

(5) The swap is used to hedge or mitigate commercial risk as provided in paragraph (c) of 

§50.50. 

§50.78 Swaps entered into by bank holding companies.

(a) For purposes of this section, the term bank holding company means an entity that is organized 

as a bank holding company, as defined in section 2 of the Bank Holding Company Act of 1956.

(b) A swap entered into by a bank holding company shall not be subject to the clearing 

requirement of section 2(h)(1)(A) of the Act and this part if: 

(1) The bank holding company has aggregated assets, including the assets of all of its 

subsidiaries, that do not exceed $10,000,000,000 according to the value of assets of each 

subsidiary on the last day of each subsidiary’s most recent fiscal year;
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(2) One of the counterparties to the swap reports the swap to a swap data repository pursuant to 

§§45.3 and 45.4 of this chapter, and reports all information as provided in paragraph (b) of 

§50.50 to a swap data repository; and

(3) The swap is used to hedge or mitigate commercial risk as provided in paragraph (c) of 

§50.50.

§50.79 Swaps entered into by savings and loan holding companies.

(a) For purposes of this section, the term savings and loan holding company means an entity that 

is organized as a savings and loan holding company, as defined in section 10 of the Home 

Owners’ Loan Act of 1933.

(b) A swap entered into by a savings and loan holding company shall not be subject to the 

clearing requirement of section 2(h)(1)(A) of the Act and this part if: 

(1) The savings and loan holding company has aggregated assets, including the assets of all of its 

subsidiaries, that do not exceed $10,000,000,000 according to the value of assets of each 

subsidiary on the last day of each subsidiary’s most recent fiscal year; 

(2) One of the counterparties to the swap reports the swap to a swap data repository pursuant to 

§§45.3 and 45.4 of this chapter, and reports all information as provided in paragraph (b) of 

§50.50 to a swap data repository; and

(3) The swap is used to hedge or mitigate commercial risk as provided in paragraph (c) of 

§50.50.

Issued in Washington, DC, on [ ], 2020, by the Commission.
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Christopher J. Kirkpatrick,

Secretary of the Commission.