CFTC, SEC Finalize Swap Product Definitions


I. 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 (the “Swap Definitions”) regarding the definition and regulation of swaps, security-based swaps, mixed swaps and security-based swap agreements. The Swap Definitions were adopted pursuant to Title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act” or “DFA”), which mandated the CFTC and SEC to “further define” and refine the definitions in the DFA relating to swaps and security-based swaps (collectively, “Title VII instruments”). Under this framework, the SEC has regulatory authority over security-based swaps, the CFTC has regulatory authority over swaps, the agencies will jointly regulate mixed swaps, and the SEC will continue to have antifraud authority over certain CFTC-regulated instruments, including securitybased swap agreements.

The Swap Definitions were published in the Federal Register on August 13, 2012,1 and will become effective on October 12, 2012. The occurrence of the effective date for the Swap Definitions will trigger effective and compliance dates for many other rules promulgated by the Dodd-Frank Act, including the rule requiring registration with the CFTC for anyone who falls within the definition of Swap Dealer or Major Swap Participant (as defined in the DFA and related CFTC regulations).

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