Saturday, December 06, 2014

House Clarifies SEC-CFTC Clearing Rules for Affiliate Swap Transactions

The House passed by voice vote a bi-partisan measure, H.R. 5471, which amends the Commodity Exchange Act and the Securities Exchange Act to revise the treatment of affiliate transactions that may be exempt from clearing requirements to authorize such an exemption only if the affiliate enters into the swap to hedge or mitigate the commercial risk of the person that is not a financial entity, provided that an appropriate credit support measure or other mechanism must be used if the hedge or mitigation of commercial risk is addressed by entering into a swap with either: (1) a swap dealer or major swap participant, or (2) a security-based swap with a security- based swap dealer or major security-based swap participant.

The measure was introduced by Rep. Gwen Moore (D-WI) and co-sponsored by Rep. Steve Stivers (R-OH), both key members of the Financial Services Committee. H.R. 5471 was not marked up and reported out by either the Financial Services Committee or the Agriculture Committee, both of which had jurisdiction. Rather, it was brought directly to the House floor and passed.