SFA Submits Response to the OMB RFI on Deregulation Requesting CFTC Relief

The Structured Finance Association, in collaboration with its CFTC Regulatory Review Task Force, submitted a letter to the Office of Management and Budget (“OMB”) in response to its Request for Information (“RFI”), which solicits ideas for federal deregulation.

SFA’s response recommends certain existing CFTC regulations be revisited to enhance the functioning of securitization markets. Specifically, the SFA recommends that:

1. Securitization vehicles that are not commodity pools should be excluded from the requirement to post initial margin and variation margin with respect to their swaps.
2. Securitization swaps with excluded securitization vehicles with counterparties that are not registered swap dealers or registered security-based swap dealers should be exempted from reporting.
3. Rule 4.13(a)(4), the exemption for commodity pool operators of funds sold only to sophisticated investors, which had been repealed under the Dodd-Frank Act, should be reinstated.
4. The CFTC should revise its interpretation of the phrase “operated for the purpose of trading in commodity interests” to exclude investment vehicles that do not seek to actively trade in commodity interests but may enter into occasional swaps at inception, in connection with new securities issuances by the investment vehicle, or to hedge interest or currency exposures related to assets or exposures that are not themselves commodity interests.