Created with Sketch.Menu Transparency
	Contact Us Search
Search
 Main navigation

      
      About the CFTC
                          The Commission
                        Chairman & Commissioners
                        CFTC Organization
                        Advisory Committees
                        Budget & Performance
                        Privacy at the CFTC
                        Careers
                        Diversity and Inclusion at the CFTC
                        Industry Oversight
                          Industry Filings
                        Trading Organizations
                        Clearing Organizations
                        Data Repositories
                        Intermediaries
                        Market Surveillance
                        Contracts & Products
                        Rules & Rule Amendments
                        Anti-Money Laundering
                        Law & Regulation
                          Commodity Exchange Act & Regulations
                        How Rules Are Made
                        Holding Wrongdoers Accountable
                        Federal Register
                        Public Comments
                        CFTC Staff Letters
                        Office of Technology Innovation
                        Market Data & Economic Analysis
                          Data at CFTC
                        Commitments of Traders
                        Bank Participation Reports
                        Cotton On-Call
                        Financial Data for FCMS
                        Net Position Changes Data
                        Staff Reports
                        Weekly Swaps Report
                        Cleared Margin Reports
                        Office of the Chief Economist
                        Forms & Submissions
                        Learn & Protect
                          Check Registration & Disciplinary History
                        Submit a Tip
                        Reparations Program
                        RED List
                        Advisories & Articles
                        Videos
                        Publications
                        News & Events
                          Press Releases
                        Public Statements & Remarks
                        Events Carousel Rotation On
              On


External Meetings: Conference Call with Community and Regional Banks
  
    



  The commenters called to discuss the small financial institution exception to the financial entity definition in the end-user rule.  The commenters generally use swaps to meet banking client needs to hedge interest rate risk on loans and occasionally FX and commodity risks.  Occasionally, the commenters use swaps to hedge balance sheet risks.  They do not hold themselves out as dealers.~~~Most swaps with customers are hedged by the banks by entering into matching back-to-back swaps with swap dealers.  Most are fully collateralized, often with illiquid assets of the customer.  CDS is not offered by the commenters.~~~The callers want the swaps they execute as hedges with dealers to be subject to the end-user exception even though the customer facing swaps are not hedges for the banks (but are for the customers).~~~Regarding the small financial institution test, the commenters asserted that Congress did not limit the CFTC to a $10 billion asset test.  Instead, they advocated for $30 billion or less.  Chatham noted that existing swaps for such banks would equal 0.09% of the derivatives market in notional size and estimates that between 150 and 400 banks of that size execute swaps in the United States.  It was suggested that the CFTC should raise the asset level and add other additional tests such as a maximum exposure test and/or limits on the types of swaps the banks could execute (e.g. no CDS).~~~Chatham stated that FCMs may charge small customers between $5,000 and $10,000 per month.  Also, because the banks would not be collecting collateral from customers, but would have to post to clearing houses, the cost of collateral would raise costs for the customers.  Finally, they noted that clearing would require regular monitoring and collateral posting.  These issues could make providing swaps to customers no longer worthwhile for community banks.
      
  When
              10/04/2011

  Rulemaking(s)
              XI. End-user Exception

  CFTC Staff
              Eileen DonovanErik Remmler

  Visitor(s)
              Chris Slusher – The PrivateBank and Trust CompanyMark Cvrkel – Susquehanna BankJessie Kelley – Commerce BankDavid Shutley – Atlantic Capital BankVassil Zanev – TrustmarkDenise Hall – Webster BankChris Roth – UMB BankPhil Sheridan – WintrustSean Farrell – Wintrust Jamie McConnel – ChathamMike Ashby – Chatham Craig Pflumm – ChathamSam Peterson – Chatham

  Organization(s)
              The PrivateBank and Trust CompanySusquehanna BankCommerce BankAtlantic Capital BankTrustmarkWebster BankUMB BankWintrustChatham Financial


Resources

CFTC Regulations
	Commodity Exchange Act
	Privacy Policy
	Web Policy
	FOIA
	EEO Statement
	No Fear Act
	Accessibility Statement
	Procurement
	USA.gov
	Glossary

Actions

Search Public Comments
	Submit Tips & Complaints
	Search Industry FilingsWhistleblower.gov
	Office of Technology InnovationInspector GeneralSitemap

HomeCFTC Headquarters
Three Lafayette Centre
1155 21st Street, NW
Washington, DC 20581
202.418.5000