Cftc and sec define swap dealer and major swap participant april 19, 2012. 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. Securities exchange act of 1934 new york stock exchange. Final rules and interpretation definition of securitybased swap dealer 83 a. Department of treasury proposes to exempt fx swaps and. Further definition of swap, securitybased swap, and. Proposed amendments additions are underscored and deletions. The swaps regulatory improvement act would improve the ability of banks to use swaps as a tool for hedging risk. Department of the treasury issued a final determination that exempts fx swaps and fx forwards as defined below from the definition of swap. 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.
The commodity futures modernization act of 2000 cfma is united states federal legislation that ensured financial products known as overthecounter otc derivatives unregulated, accelerating the collapses of major financial companies. Section 721 of the doddfrank act amends section 1a of the cea. Further definition of swap, securitybased swap, security based swap agreement, and mixed swaps. Transactions in regional transmission organizations and independent system operators iii. Registration and regulation of swap dealers and major swap partici.
A commodity swap is a contract where two sides of the deal agree to exchange cash flows, which are dependent on the price of. 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. Commodity exchange definition is an organized market where future delivery contracts for graded commodities as grains, cotton, sugar, coffee, wool are bought and sold. Commodity futures trading commission and securities exchange. Section 721 of the doddfrank act amends the commodity exchange act cea by adding definitions of the terms 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. This publication is a compilation of the text of chapter 369 of the 67th congress. New dodd frank rules swaps, safe harbor and commodity pools. Commodity futures trading commission and securities. Not all foreign exchange swap transactions are exempt. Oct 18, 2016 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. It was last amended by the public law listed in the as amended through note above and below at the bottom of each page of the pdf version and. 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.
New dodd frank rules swaps, safe harbor and commodity. Final rules and interpretations i further defining swap. Commodity exchange act means the commodity exchange act 7 u. Department of treasury proposes to exempt fx swaps and fx. 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. Cftc relief and guidance as the swap definition takes effect. Commodity futures trading commission 17 cfr part 1. Department of the treasury determination of foreign. Requirements of secretary of the treasury regarding exemption of foreign exchange swaps and foreign exchange forwards from definition of the term swap. 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.
Protecting the enforceability of swap guaranties in light of. 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. Sec, cftc finalize definition of swap, security based. 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. Cea and securities exchange act of 1934 by the doddfrank act. The swap definition in the doddfrank act excludes forward contracts in. Scope of definitions of swap and securitybased swap. September 25, 2012 swap definitions rules finalized by the. Commodity futures trading commission cftc is determined to be at the forefront. If doddfrank is not amended, nonbank institutions will have to do many of the swap trades instead. 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. Gao found that 1 the joint final rule adopts new rules and interpretations under the. 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.
The commission has issued proposed rules to implement the doddfrank wall street reform and consumer protection act, and is seeking input on these rules from the public. 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. 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. The definition of swap excludes futures and most forward contracts. 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. Fx swaps and fx forwards exempted from definition of swap december 2012 on november 16, 2012, the u. Under this act, the cftc has authority to establish regulations.
Bona fide hedge exemptions for commodity swap dealers. Goldstein introduction on july 18, 2012, the securities and exchange commission the sec and the commodity futures. The commodity exchange act cea regulates the trading of commodity futures in the united states. Requirements of secretary of the treasury regarding exemption of foreign exchange swaps and foreign exchange forwards from definition of the term swap 2. Commission shall jointly adopt a rule further defining the terms swap, security. Through note above and below at the bottom of each page of the pdf version and. 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. The numbers in brackets refer to section numbers in title 7, united states code. The swaps regulatory improvement act is a bill that would amend the doddfrank wall street reform and consumer protection act. Government that provides federal regulation of all futures trading activities. Consumer protection act of 2010 doddfrank act, the commodity futures trading. Swap definitions rules finalized by the sec and the cftc under doddfrank by cary j. 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.
Under the commodity exchange act cea, a person who qualifies as a swap dealer or major swap participant is required to register with the commodity futures trading commission cftc and comply with the doddfrank wall street reform and consumer protection acts regulatory regime governing swaps, which generally requires, among other things. The final entity rules adopt a number of changes to the eligible contract participant definition that, among other things. Cftc and sec define swap dealer and major swap participant. Derivatives rules under the doddfrank act affecting end. Using form contracts typically used for, swaps or securitybased swaps 2. 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. Commodity exchange act and related regulatory issues.
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. The commodity futures trading commission and the securities and exchange. The following is a revised version of the commodity exchange act. Gao found that 1 the joint final rule adopts new rules and interpretations under the commodity. Commodity futures modernization act of 2000 wikipedia. Cftc and sec adopt definition of swap willkie farr. The cea establishes the statutory framework under which the cftc operates. Fx swaps and fx forwards exempted from definition of swap. 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. The cftc further clarifies enduser exception to the. Passed in 1936, it has been amended several times since then. 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. The commodity futures trading commission and the securities and.
794 1117 449 597 158 547 970 676 311 1537 691 327 699 32 593 600 1272 1410 757 503 300 682 80 985 759 726 1156 61 346 1038 794 771 1413 295 1341 346 882 804 1214 626 1339 45 1314 952 985 1472 996