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Commentary by Nihal Patel

The recently-enacted Consolidated Appropriations Act, 2016 included amendments to the exemption from swaps mandatory clearing for hedging affiliates in the CEA and SEA. In particular, Section 705 modifies the exemption from mandatory clearing provided to so-called "treasury affiliates" in CEA Section 2(h)(7)(D) ("Mandatory Clearing Requirements for Swaps - Treatment of Affiliates"). The amendments modify the application of the exemption by: removing the requirement that the affiliate be acting as "agent" in the transaction; requiring that the commercial risk must have been actually transferred