ISDA/SIFMA Comment Letter to CFTC's Proposed Rule Regarding Swaps between Affiliates (With Lofchie Comment)

In this joint comment letter, SIFMA and ISDA made a number of recommendations to the CFTC regarding clearing between affiliates. The particular recommendations are listed below:

• The trade execution requirement should not apply to interaffiliate swaps;
• Adopt a more flexible formulation of the proposed documentation requirement; and
• Eliminate the conditions proposed for collection of variation margin and the extraterritorial clearing of swaps related to interaffiliate swaps.
  • If the CFTC retains the variation margin condition, it should make certain changes and clarifications to the proposed rule text (which should include the elimination of the "common guarantor" requirement from its proposed exception); and
  • If the CFTC retains the extraterritorial clearing condition, it should provide for an appropriate transition period to allow foreign jurisdictions time to implement their G-20 clearing mandates.

Lofchie Comment: Although it is not the focal point of this letter, the problem that lurks everywhere for the CFTC is how to deal with cross-border issues, of which trades between affiliates are just one manifestation. It is a problem that simply is not going to disappear. At some point, the CFTC will have to take on much more directly the problems of co-operation with non-U.S. regulators, the barriers regulations create to cross-border transactions, and issues of international competitiveness.

Link here to find the comment letter in full (links externally to CFTC website). See also: Related comment letters by EEI, Prudential, MetLife, and others.