CFTC Proposes Clearing Exemption for Swaps Between Certain Affiliated Entities

28 August 2012
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Key takeaways:

  • The CFTC has proposed an exemption to the clearing requirement for certain swaps between affiliated counterparties.
  • Under the proposed exemption, subject to the satisfaction of certain CFTC requirements, a swap between eligible affiliates need not be cleared if both parties elect not to clear it and its basic terms are documented in writing.
  • Among other requirements, such swap must be subject to a risk management program and to collateralization under certain circumstance, and the parties will have to comply with additional reporting requirements.