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Under the rule, companies can exclude the swaps they use to hedge their business against risk like, say, interest rate fluctuations. And the rule would apply only to a company’s swaps transactions, so firms would not need to count their other varieties of derivatives, like forwards and options. The Commodity Futures Trading Commission also scrapped a strict provision that would have prevented companies that are exempt from the rules from arranging more than 20 swap contracts in one year, regardless of the dollar amount.
As a result, some large banks and other players are expected to avoid regulatory scrutiny in swaps, based on data from the Office of the Comptroller of the Currency. Both Northern Trust and BOK Financial, the parent company of Bank of Oklahoma, which are listed among the top 25 banks in the derivatives business, could be exempt. Major energy firms like Constellation Energy are also expected to get a pass.
Such companies pushed regulators to relax the rules. A coalition of energy firms, including BP, Constellation Energy and Shell, sent regulators a letter that pitched a $3.5 billion threshold and even suggested specific wording changes to the rule. Another group, known as the Coalition of Physical Energy Companies, proposed a $3 billion figure, the threshold that regulators are set to adopt after five years.
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