September 29, 2017

Mr. Christopher Kirkpatrick
Secretary
U.S. Commodity Futures Trading Commission
1155 21st Street, NW
Washington, DC 20581

Re: Commodity Futures Trading Commission Request for Public Input on Simplifying Rules (Project KISS); Swap Dealer Registration (RIN 3038-AE55)

Dear Mr. Kirkpatrick:

The Securities Industry and Financial Markets Association (“SIFMA”)1 greatly appreciates the continuing efforts of the Commodity Futures Trading Commission (“CFTC” or “Commission”) and its staff to review rules, regulations and practices to identify those areas that can be simplified and made less burdensome and costly, including as part of the Commission’s Project KISS initiative.2 As the Commission has implemented many important and significant requirements under Title VII of the Dodd–Frank Wall Street Reform and Consumer Protection Act (“Dodd Frank”), such a review is timely as both the Commission and market participants have a better understanding of the resulting impacts of such efforts, helping to inform where changes are necessary and appropriate.

One such area we believe would benefit from review and reconsideration are certain aspects of the CFTC’s approach to swap dealer (“SD”) registration. Given the significant costs, operational builds and regulatory duties associated with registering an entity with the Commission as an SD (including compliance with the panoply of Title VII requirements), it is imperative that the scope of transactions which count towards the de minimis threshold as required by Regulation 1.3(ggg)(4)(ii)(B)3 is appropriately tailored. We support Commission efforts to delay an automatic drop of the SD de minimis threshold from $8 billion to $3 billion, to provide additional time for analysis of available swap data and relevant policy considerations to assess whether revisions to the current scope and level are appropriate 4. We believe it is also imperative the Commission appropriately tailor the scope of transactions which lead to SD registration in the cross-border context. 5 Title VII should not apply extraterritorially to U.S. firms’ foreign branches or affiliates where existing regulation already protects against significant risk flowing back to the United States. As such, SD registration should not apply to a U.S. firm’s non-U.S. affiliate on the basis of trading with nonU.S. counterparties if the U.S. firm’s non-U.S. affiliate is regulated in a G20 jurisdiction or otherwise subject to Basel-compliant capital standards, regardless of whether the affiliate is guaranteed by its U.S. parent. Further, non-U.S. swap counterparties should not be required to register as SDs as a result of doing business with a U.S. firm’s foreign branch or affiliate (guaranteed or not), and rather allow for existing prudential regulation to address any risks faced by U.S. firms trading abroad. By appropriately excluding such transactions from registration calculations, the Commission would promote U.S. competitiveness abroad and facilitate continued access of U.S. firms to foreign liquidity providers, trading platforms and centralized counterparties (“CCPs”)

The attached appendix identifies specific aspects of the Commission’s SD registration regime that SIFMA believes would benefit from reevaluation and clarification or revision.

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Please feel free to reach out to the undersigned should you have any questions.

Sincerely,

Kyle Brandon
Managing Director, Head of Derivatives
SIFMA

1 SIFMA is the voice of the U.S. securities industry. We represent the broker-dealers, banks and asset managers whose nearly 1 million employees provide access to the capital markets, raising over $2.5 trillion for businesses and municipalities in the U.S., serving clients with over $18.5 trillion in assets and managing more than $67 trillion in assets for individual and institutional clients including mutual funds and retirement plans. SIFMA, with offices in New York and Washington, D.C., is the U.S. regional member of the Global Financial Markets Association (GFMA). For more information, visit http://www.sifma.org.

2 See Project KISS, 82 FR 21494 (May 9, 2017), available at: https://www.gpo.gov/fdsys/pkg/FR-2017-05- 09/pdf/2017-09318.pdf; and Press Release, available at: http://www.cftc.gov/PressRoom/PressReleases/pr7555-17.

3 17 CFTC Section 1.3(ggg)(4)(ii)(B).

4 See Order Establishing De Minimis Threshold Phase-in Termination, 81 FR 71605 (Oct. 18, 2016). Also see Commission staff’s Aug. 2016 final report on the SD de minimis exception, available at http://www.cftc.gov/idc/groups/public/@swaps/documents/file/dfreport_sddeminis081516.pdf..

5 There are several other significant issues relating to the Commission’s cross-border application of Title VII that SIFMA believes must be reconsidered, though not addressed in this submission. These include issues regarding the scope of the definition of “U.S. Person,” the process for/scope of substituted compliance determinations and the treatment of swap transactions arranged, negotiated or executed by personnel or agents of non-U.S. SDs located in the United States, among others. SIFMA looks forward to discussing these key issues with the Commission. For previous cross-border related comments, please see Dec. 2016 comments submitted jointly with the Institute of International Bankers (“IIB”) in response to proposed rule on the cross-border application of registration thresholds and external business conduct standards (available at: https://www.sifma.org/resources/submissions/sifma-and-iib-submits comments-to-the-cftc-on-cross-borderapplication/); Dec. 2016 joint trade comments on the same proposal (available at: https://www.sifma.org/resources/submissions/sifma-and-other associations-submit-comments-to-the-cftc-oncross-border-application/); Sep. 2015 comments with IIB in response to cross-border margin requirements proposal (available at: https://www.sifma.org/resources/submissions/sifma-and-iib-submits-comments-to-thecftc-on-cross-border-margin-proposal/); Mar. 2014 comments with the Futures Industry Association and Financial Services Roundtable regarding a request for comment on the application of CFTC regulations to swaps between Non-U.S. SDs and Non-U.S. counterparties involving personnel or agents of non-U.S. SDs in the United States (available at: https://www.sifma.org/resources/submissions/sifma-fia-and-fsr-submit-comments-to-the-cftc onregulation-of-swaps-between-non-us-swap-dealers-and-non-us-counterparties/); and Aug. 2012 comments in response to proposed interpretive guidance on the cross-border application of Title VII (available at: https://www.sifma.org/resources/submissions/sifma-submits-comments-to-the-cftc-on-guidance-related-to-crossborder-application-of-certain-swaps provisions/)