rule.100 Rather, the Agencies have included provisions in the final rule that would require covered swap entities to subject these to margin requirements to the “other counterparties” extent that their own internal risk management procedures would require that these counterparty relationships be margined. A few commenters argued that the exclusion from financial end user for a person that qualifies for the affiliate exemption from clearing pursuant to section 2(h)(7)(D) of the Commodity Exchange Act requires an entity to be acting for an affiliate and thus would as agent not capture equivalent entities that act for an affiliate. These commenters contended as principal that many such entities act as principal for an affiliate and that the CFTC has issued no-action letters, effectively exempting such entities from clearing.101 As noted above, the Agencies intend to align the exclusions from the definition of financial end user as much as possible with statutory exceptions as well as exclusions implemented by the CFTC by rule. The Agencies note that to the extent the CFTC acts to exempt such entities from clearing by rule, these entities would also be excluded from the definition of financial end user for purposes of this rule. A few commenters requested that the Agencies exclude from the definition of financial end user those entities guaranteed by a foreign sovereign or multilateral development bank.102 As further discussed below, the final rule specifically excludes these entities from the 100 definition of end Instead, they are treated as with “financial users.” “other counterparties” respect to the initial and variation margin requirements to the extent the swaps they enter rule’s into with covered swap entities are not otherwise exempt from the requirements of this rule. With respect to the initial margin requirements, the category also includes “other counterparties” financial end users that do not have a material swaps exposure. CFTC No-Action Letter No. 13-22 (June 4, 2013); CFTC No-Action Letter No. 14-144 See 101 (Nov. 26, 2014). Some commenters requested additional clarity that certain entities would be included as 102 multilateral development banks. The definition in the final rule includes any other entity that provides financing for national or regional development in which the U.S. government is a shareholder or contributing member or which the relevant Agency determines poses comparable
rule.100 Rather, the Agencies have included provisions in the final rule that would require covered swap entities to subject these “other counterparties” to margin requirements to the extent that their own internal risk management procedures would require that these counterparty relationships be margined. A few commenters argued that the exclusion from financial end user for a person that qualifies for the affiliate exemption from clearing pursuant to section 2(h)(7)(D) of the Commodity Exchange Act requires an entity to be acting as agent for an affiliate and thus would not capture equivalent entities that act as principal for an affiliate. These commenters contended that many such entities act as principal for an affiliate and that the CFTC has issued no-action letters, effectively exempting such entities from clearing.101 As noted above, the Agencies intend to align the exclusions from the definition of financial end user as much as possible with statutory exceptions as well as exclusions implemented by the CFTC by rule. The Agencies note that to the extent the CFTC acts to exempt such entities from clearing by rule, these entities would also be excluded from the definition of financial end user for purposes of this rule. A few commenters requested that the Agencies exclude from the definition of financial end user those entities guaranteed by a foreign sovereign or multilateral development bank.102 100 As further discussed below, the final rule specifically excludes these entities from the definition of “financial end users.” Instead, they are treated as “other counterparties” with respect to the rule’s initial and variation margin requirements to the extent the swaps they enter into with covered swap entities are not otherwise exempt from the requirements of this rule. With respect to the initial margin requirements, the “other counterparties” category also includes financial end users that do not have a material swaps exposure. 101 See CFTC No-Action Letter No. 13-22 (June 4, 2013); CFTC No-Action Letter No. 14-144 (Nov. 26, 2014). 102 Some commenters requested additional clarity that certain entities would be included as multilateral development banks. The definition in the final rule includes any other entity that provides financing for national or regional development in which the U.S. government is a shareholder or contributing member or which the relevant Agency determines poses comparable
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