On August 13, MFA submitted a letter to the Commodity Futures Trading Commission (CFTC) on the CFTC’s proposed amendments to the de minimis exception from swap dealer (SD) registration. In the letter, MFA recommends that the CFTC exclude all cleared swaps from the calculation of aggregate gross notional amount for purposes of the de minimis threshold. MFA’s rationale in the letter for the suggested exclusion is as follows:
- The exclusion would be beneficial to central clearing, which was a key mandate of the Dodd-Frank Wall Street Reform and Consumer Protection Act.
- The current de minimis exception may be constraining liquidity in the cleared swaps markets by causing potential new entrants to avoid making markets in cleared swaps and causing existing market participants to curtail their swaps trading activity to stay below the de minimis threshold and avoid SD registration.
- The exclusion would increase the number of available cleared swap counterparties, which should in turn increase competition, improve liquidity, and drive narrower bid/offer spreads.