The commodity futures trading commission and the securities and exchange. Introduction on july 9 and 10, 2012, the commodity futures trading commission and securities and exchange commission collectively, the commissions approved joint final rules and interpretations regarding the definition and regulation of. Proposed amendments additions are underscored and deletions. September 25, 2012 swap definitions rules finalized by the.
Goldstein introduction on july 18, 2012, the securities and exchange commission the sec and the commodity futures. Commodity exchange definition of commodity exchange by. This publication is a compilation of the text of chapter 369 of the 67th congress. Under the commodity exchange act, a person that is not an eligible contract participant cannot enter into a swap except on, or subject to, the rules of a designated contract market. The commodity futures trading commission and the securities and. Gao found that 1 the joint final rule adopts new rules and interpretations under the commodity. The final entity rules adopt a number of changes to the eligible contract participant definition that, among other things. Scope of definitions of swap and securitybased swap. On june 17,2011, the commodity futures trading commission cftc or the commission published for public comment in the federal register a proposed order that would grant, pursuant to the commissions exemptive authority pursuant to section 4 c of the commodity exchange act cea, certain temporary relief from the.
A commodity swap is a contract where two sides of the deal agree to exchange cash flows, which are dependent on the price of an underlying commodity. The cftc further clarifies enduser exception to the mandatory clearing requirement for swaps july 18, 2012 section 2h of the commodity exchange act the cea, as amended by the doddfrank wall street reform and consumer protection act, grants the cftc authority to require that certain. Commodity futures trading commission 17 cfr part 1. New dodd frank rules swaps, safe harbor and commodity pools. Cftc and sec adopt definition of swap willkie farr. Derivatives rules under the doddfrank act affecting end. If doddfrank is not amended, nonbank institutions will have to do many of the swap trades instead. The cea establishes the statutory framework under which the cftc operates. The swap definition in the doddfrank act excludes forward contracts in.
Final rules and interpretations i further defining swap. The following is a revised version of the commodity exchange act. Securities exchange act of 1934 new york stock exchange. The swaps regulatory improvement act would improve the ability of banks to use swaps as a tool for hedging risk. Commodity futures modernization act of 2000 wikipedia.
Section 721 of the doddfrank act amends section 1a of the cea. Passed in 1936, it has been amended several times since then. Further definition of swap, securitybased swap, security based swap agreement, and mixed swaps. Fx swaps and fx forwards exempted from definition of swap december 2012 on november 16, 2012, the u. The numbers in brackets refer to section numbers in title 7, united states code. The definition of swap excludes futures and most forward contracts. Not all foreign exchange swap transactions are exempt.
Swaps and fx forwards from the definition of swap under the commodity exchange act on april 29, 2011, the department of the treasury the treasury issued a notice of proposed determination the proposed determination to exempt foreign exchange swaps. Cftc and sec define swap dealer and major swap participant. Under this act, the cftc has authority to establish regulations. Cftc relief and guidance as the swap definition takes effect. Through note above and below at the bottom of each page of the pdf version and. Introduction the doddfrank wall street reform and consumer protection act doddfrank act2 was signed into law on july 21, 2010 as a set of major amendments to the commodity exchange act cea. Cftc and sec adopt definition of swap and securitybased swap the commodity futures trading commission and the securities and exchange commission have issued joint final rules and interpretations1 that, among other things, further define swap under the commodity exchange act and securitybased swap under the securities. Commodity exchange definition is an organized market where future delivery contracts for graded commodities as grains, cotton, sugar, coffee, wool are bought and sold. Bona fide hedge exemptions for commodity swap dealers march 24, 2009 limits restrict the size of positions that may be held by any trader or two or more traders under common control or acting in concert for speculative purposes. Requirements of secretary of the treasury regarding exemption of foreign exchange swaps and foreign exchange forwards from definition of the term swap. The swaps regulatory improvement act is a bill that would amend the doddfrank wall street reform and consumer protection act. The final product definitions provide further clarity as to which derivatives products fall under each definition and thus delineate the regulatory and enforcement jurisdictions of the cftc and the sec.
Commodity pool definition as amended by doddfrank, the commodity exchange act cea now defines the term commodity pool to include any investment trust, syndicate, or similar form of enterprise operated for the purpose of trading in commodity interests, including any. Consumer protection act of 2010 doddfrank act, the commodity futures trading. An fx swap foreign exchange swap, which is defined in the commodity exchange act, as amended the cea, is a transaction that solely involves i an exchange of two different currencies on a specific date at a fixed rate that is. Further definition of swap, securitybased swap, and. The commodity futures trading commission cftc and the securities and exchange commission sec adopted highly anticipated final rules yesterday to further define the terms swap dealer, security. Department of treasury proposes to exempt fx swaps and fx. The broad definition of swap set forth in title vii of the doddfrank act includes any. Commodity exchange act means the commodity exchange act 7 u. Section 721 of the doddfrank act amends the commodity exchange act cea by adding definitions of the terms swap, securitybased swap, and. Department of the treasury issued a final determination that exempts fx swaps and fx forwards as defined below from the definition of swap under the commodity exchange act the exemption. Swap definitions rules finalized by the sec and the cftc under doddfrank by cary j.
Government that provides federal regulation of all futures trading activities. Requirements of secretary of the treasury regarding exemption of foreign exchange swaps and foreign exchange forwards from definition of the term swap 2. Cftc relief and guidance as the swap definition takes effect cftc issues interpretive and noaction letters, and responds to questions providing guidance as the definition of swap takes effect summary the securities and exchange commission sec and commodity futures trading commission. Protecting the enforceability of swap guaranties in light of. Cea and securities exchange act of 1934 by the doddfrank act. Transactions in regional transmission organizations and independent system operators iii. Under the commodity exchange act cea, as amended by doddfrank, it is unlawful for any person other than an eligible contract participant ecp, as defined in section 1a18 of the cea, to enter into a swap unless the swap is entered into on, or subject to the rules of, a. Commodity exchange act and related regulatory issues. Department of treasury proposes to exempt fx swaps and. Commodity futures trading commission and securities. The commodity exchange act cea regulates the trading of commodity futures in the united states. Fx swaps and fx forwards exempted from definition of swap. Commodity futures trading commission cftc is determined to be at the forefront.
Cftc relief and guidance as the swap definition takes effect cftc issues interpretive and noaction letters, and responds to questions providing guidance as the definition of swap takes effect summary the securities and exchange commission sec. Any foreign exchange swap and any foreign exchange forward that is listed and traded on or subject to the rules of a designated contract market or a swap execution facility, or that is cleared by a derivatives clearing organization, shall not be exempt from any provision of this chapter or amendments made by the wall street transparency and accountability act of 2010 prohibiting fraud or manipulation. The cftc further clarifies enduser exception to the. Cftc and sec define swap dealer and major swap participant april 19, 2012. Registration and regulation of swap dealers and major swap partici. Final rules and interpretation definition of securitybased swap dealer 83 a. Using form contracts typically used for, swaps or securitybased swaps 2. A guide to doddfrank for users of swaps april 17, 20 page 87 a guide to doddfrank for users of swaps under title vii of the doddfrank act, key participants in the swaps market are required to register and assume compliance obligations, and many other market participants must.
Department of the treasury determination of foreign. Gao found that 1 the joint final rule adopts new rules and interpretations under the. Commodity options are included in the definition of swap under the commodity exchange act, as amended by the doddfrank act cea, 3 and, as such, absent an exemption, are subject to the various requirements thereunder applicable to. New dodd frank rules swaps, safe harbor and commodity. A commodity swap is a contract where two sides of the deal agree to exchange cash flows, which are dependent on the price of. Commodity futures trading commission and securities exchange. The term commodity pool is defined broadly under the commodity exchange act cea to include any investment trust, syndicate or similar form of enterprise operated for the purpose of trading in commodity interests, including any commodity for future delivery, securities futures product or swap, agreement in foreign currency. Department of the treasury issued a final determination that exempts fx swaps and fx forwards as defined below from the definition of swap.
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