CFTC flags swaps rules for new bridge banks after SVB, Signature failures

The Commodity Futures Trading Commission (CFTC) announced it’s been in contact with banking regulators following the recent failures of Silicon Valley Bank and Signature Bank concerning the transfer by the Federal Deposit Insurance Corporation (FDIC) of qualified financial contracts (QFCs) from the failed banks to newly established bridge banks, Silicon Valley Bridge Bank, N.A. and Signature Bridge Bank, N.A., respectively.

To the extent that the transfer of QFCs that are swaps would cause them to be subject to certain CFTC swaps regulations, including business conduct, margin, clearing, and trade execution requirements. The CFTC said in a statement it will not commence enforcement action for violations of such regulations resulting solely from the FDIC ordered transfers.

The CFTC further recognizes that transfer of QFCs that are swaps to the newly established bridge banks may impact the ability of reporting counterparties for such swaps to fulfill their obligations under the CFTC’s swaps reporting requirements. Reporting counterparties should use best efforts to fulfill their reporting obligations with respect to such swaps, and there will be consideration of action related to swaps reporting obligations as appropriate.


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