CFTC Adopts Swap Capital Requirements

The CFTC adopted a final rule establishing capital requirements for swap dealers ("SDs"). (Whle major swap participants ("MSPs") are also subject to the rule, we do not expect there to be any such entities.) The vote was 3-2, along party lines, with dissenting Democratic CFTC Commissioners Rostin Behnam and Dan Berkovitz asserting that certain of the capital measures were not sufficiently strict.

As previously covered, in December 2019, the CFTC voted to reopen the comment period for a proposed rule on capital and financial reporting requirements for SDs. The proposal was first published in December 2016.

Highlights of the Final Rule

The final rule imposes capital requirements, and financial reporting and recordkeeping requirements, on non-prudentially regulated ("nonbank") SDs. The rule provides three alternative methods for nonbank SDs to calculate their capital requirements: