The background of the de minimis exception and SD regulation.

The available swap data used in developing estimates of swap dealing activity.

The potential effects of raising or lowering the threshold and several possible alternative approaches to the de minimis exception.

A notional de minimis threshold specific to each asset class of swaps.

A multi-factor approach that would potentially include counterparty count and/or transaction count metrics in the de minimis exception, in addition to a gross notional dealing threshold.

A multi-tiered approach where the regulatory requirements associated with SD registration are commensurate with an entity's level of dealing activity.

The exclusion from an entity's de minimis calculation of swaps that are traded on a registered or exempted swap execution facility (SEF) or designated contract market (DCM) and/or cleared.

Confirms that the current de minimis threshold of $8 billion as well as the contemplated threshold of $3 billion are completely arbitrary. The report provides no reason to believe that the threshold has anything to do with optimizing the safety, soundness, liquidity or vibrancy of US swaps markets.

Fails to give significant insight into the amount of swap dealing activity being conducted today in the marketplace. This is predominantly due to the fact that swap data repository (SDR) data available for analysis does not include fields indicating whether a transaction was entered into for dealing purposes. A lack of necessary data created the need for staff to make many assumptions that may or may not be valid in an attempt to draw conclusions from the data.

Indicates that a drop in the SD registration threshold from $8 billion to $3 billion would capture a significant number of market participants causing them to either register as SDs, or reduce services to the marketplace. While lowering the threshold to $3 billion would expand the CFTC's reach to more market participants, it would not have an appreciable impact on marketplace coverage of notional amount, number of transactions, or unique counterparties. The $3 billion threshold would therefore create unnecessary burdens for non-financial companies that engage in relatively small levels of swap dealing to manage business risk for themselves and their customers. It would probably end up causing many non-financial companies to curtail or terminate risk-hedging activities with their customers, limiting risk-management options for end users, and ultimately consolidating marketplace risk in only a few large SDs which will increase systemic risk in the marketplace.