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

Commodity Futures Trading Commission

Office of Public Affairs

Three Lafayette Centre

1155 21st Street, NW

Washington, DC 20581

www.cftc.gov

July 27, 2022

Fact Sheet – Request for Comment on Proposed Comparability Determination for Japan 

Non-Bank Swap Dealer Capital and Financial Reporting Requirements 

for Substituted Compliance Purposes 

In response to an application submitted by the Japan Financial Services Agency (JFSA) the Commodity Futures 

Trading Commission (CFTC or Commission) is requesting comment on a proposed comparability determination 

that would permit substituted compliance of Japan’s capital and financial reporting requirements for nonbank swap 

dealers as compared to the capital and financial reporting requirements adopted by the Commission pursuant to

Title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act. 

Swap Dealer Capital and Financial Reporting Requirements

On July 24, 2020, pursuant to sections 4s(e) and 4s(f) of the Commodity Exchange Act (CEA), the CFTC adopted final swap 

dealer (SD) capital and financial reporting rules (SD Capital Rule) applicable to SDs that are not otherwise subject to 

regulation by a prudential regulator (nonbank SDs). The regulations had a compliance date of October 6, 2021, and are 

designed generally to ensure the safety and soundness of nonbank SDs by requiring the firms to maintain appropriate levels of 

capital in order to operate as CFTC-registered SDs. 

The CFTC Capital Rule provides nonbank SDs with an option to elect a bank-based capital approach (Bank-Based Approach), 

which is based on certain capital requirements imposed by the Federal Reserve Board for bank holding companies.

As part of the overall assessment and monitoring of nonbank SDs for compliance with the Commission’s capital 

requirements, the SD Capital Rule also requires nonbank SDs to file with the Commission and National Futures Association 

financial information, including periodic unaudited and annual audited financial statements, specific financial position 

information, and notices of certain events that may indicate a potential financial or operational issue that may adversely impact 

a nonbank SD’s ability to meet its obligations to counterparties and other creditors in the swaps market.

The Commission also established a substituted compliance framework as part of the SD Capital Rule that permits a non-U.S. 

domiciled nonbank SD, trade association, or foreign-country regulator to submit an application to the Commission for a 

determination that compliance with applicable home country capital and financial reporting requirements will satisfy all or 

parts of the Commission’s capital rules and financial reporting rules. 

Standard of Review for Comparability Determinations

The Commission’s review process reflects a principles-based, holistic approach that focuses on whether the applicable foreign 

jurisdiction’s SD capital and financial reporting requirements achieve comparable outcomes to the corresponding Commission

requirements for nonbank SDs and whether such requirements are comparable to the Commission’s in purpose and effect, 

not whether they are comparable in every aspect or contain identical elements. In making a preliminary comparability 

determination, the Commission considers, among others, the scope and objectives of the foreign jurisdiction’s capital and 

financial reporting requirements; whether the foreign jurisdiction’s capital and financial reporting requirements achieve 

comparable outcomes to the Commission’s corresponding capital requirements and financial reporting requirements; and the 

ability of the foreign regulatory authority or authorities to supervise and enforce compliance with the foreign jurisdiction’s

capital adequacy and financial reporting requirements. 
Commodity Futures Trading Commission ♦ Office of Public Affairs ♦ 202-418-5080 

Summary of Comparability Determination for Japan

On September 21, 2021, the JFSA submitted a request (JFSA Application) that the Commission determine that registered 

nonbank SDs organized and domiciled in Japan may satisfy certain capital and financial reporting requirements under the CEA

by being subject to and complying with corresponding capital and financial reporting requirements under Japanese laws and 

regulations. 

The Commission’s preliminary view, based on the JFSA Application and the Commission’s review of applicable Japanese laws 

and regulations, is that the Japanese capital rules and the financial reporting rules generally achieve comparable outcomes and 

are comparable in purpose and effect to the CFTC capital rules and financial reporting rules, subject to various conditions

specified in the Commission’s proposed comparability order. While certain differences between the Japanese capital rules and 

financial reporting rules and those of the CFTC exist, in the Commission’s preliminary view, the differences generally would 

not be inconsistent with providing a substituted compliance framework for Japanese nonbank SDs, subject to the specified 

conditions. 

The Commission’s proposed order is limited to the comparison of the Japanese capital rules to the Bank-Based Approach 

under the CFTC capital rules. The Japanese capital rules, as understood by the Commission, impose bank-like capital 

requirements on a Japanese nonbank SD that are consistent with the Basel Committee on Banking Supervision’s (BCBS) 

international framework for bank capital requirements.

 

Comment Period

The CFTC is inviting public comment on its analysis and proposed comparability determination order, including its proposed 

conditions, as well as on the JFSA Application and relevant Japanese laws. 

The public comment period will be open for 60 days. Comments, identified by “Japan Swap Dealer Capital Comparability 

Determination” may be submitted via the CFTC Comments Portal at: https://comments.cftc.gov 

Comments may also be submitted by mail or by hand delivery to the Commission’s address at Three Lafayette Centre, 1155 

21st Street NW, Washington, DC 20581, although submission through the CFTC Comments Portal is encouraged to avoid 

possible delays.