Commissioners Sommers and O'Malia Joint Statement of Dissent on Clearing Exemption for Swaps between Certain Affiliated Entities

Commissioners Jill Sommers and Scott O'Malia submitted a joint statement to the CFTC regarding the notice of proposed rulemaking to exempt swaps between certain affiliated entities from the clearing requirement. Although the Commissioners believe it is appropriate that the Commission exempt inter-affiliate swaps from the clearing mandate, the Commissioners argue that the proposal inserts a requirement that most financial entities engaging in inter-affiliate swaps post variation margin to one another. Furthermore, the Commissioners state that it is not clear this requirement will do anything other than create administrative burdens and operational risk while unnecessarily tying up capital that otherwise would be used for investment.

View statement in full here(links externally to CFTC website). See also: News item describing the CFTC rule proposal from which the Commissioners are dissenting here.