Buried within the $1.1 trillion dollar Consolidated Appropriations Act (H.R. 2029) are provisions that had been the focus of long-standing Financial Executives International efforts to revise Dodd Frank. Over three Congresses and five years these revisions had transformed into two separate bills. One bill exempted derivatives end-users, i.e. non-financial companies that use derivatives to hedge risk and not for speculative purposes, from the payment of margin on swaps transaction. That bill passed as part of the Terrorism Risk Insurance Act (TRIA) on January 8, 2015.
The second piece of legislation was the Centralized Treasury Unit (CTU) bill that exempted derivatives end users who consolidated and managed their hedging activities through a CTU from onerous and costly clearing and reporting requirements. That bill (H.R. 1317) passed by voice vote out of the House of Representatives on November 16, 2015. Similar bills had previously been passed by the House only to languish in a Democrat-controlled Senate. This time, however, the language was attached to the Consolidated Appropriations Act (H.R. 2029) and passed both the House and Senate on December 18, 2015. The President signed the bill into law on the same day.
FEI, as an executive committee member of the Coalition for Derivative End Users, actively participated in coalition conferences, fly-ins, congressional meetings, comment letters, as well as meetings with the U.S. Commodity Futures Trading Commission, Federal Reserve Board, Federal Deposit Insurance Corporation and the administration. FEI and the Committee on Corporate Treasury engaged with and helped educate members of Congress on the facts underlying the need for the CTU bill, showing that the use of CTUs actually lowered systemic risk and improved the reporting process. The Coalition is also focused on assuring that these gains are reflected in revisions to the EU’s European Market Infrastructure Regulation (EMIR).
For a detailed account of the tax benefits contained in the Protecting Americans from Tax Hikes (PATH) Act (the extenders bill), see Karen Lapsevic, “Congress, President Gift Massive Spending and Tax Package before Holidays, Private Companies are Key Beneficiaries,” in FEI Daily.