Proposed Dealer and Major Participant Definitions

The Asset Management Group (AMG) of SIFMA provides supplemental comments to the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC) on definitions of “swap dealer” and “security-based swap dealer,” as well as “major swap participant” and “major security-based swap participant,” (collectively MSPs) under Title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act), File Number 4-633, S7-39-10.

SIFMA AMG reiterates that MSP definitions should not target asset managers or investment advisors, but rather entities that actually maintain substantial positions in swaps.  In addition, highly regulated entities such as Employee Retirement Income Security Act (ERISA) plans and SEC-Registered Investment Companies should not be designated MSPs because they are already subject to significant regulatory oversight.  Lastly, under the proposal, entities that do not engage in significant swap transactions would still have to perform daily calculations for swap monitoring.  As these calculations are quite onerous, the AMG feels that there should be a safe harbor from frequent calculations for entities that do not have significant uncollateralized swap exposure.

SIFMA AMG’s first set of comments on the issue was filed, February 22, 2011.  In addition, SIFMA AMG took the opportunity to provide the CFTC and the SEC with precomment letters on this topic on September 20, 2010 and November 24, 2010.