Joint Proposals Defining ‘Swap,’ ‘Security-Based Swap,’ & ‘Security-Based Swap Agreement’

SIFMA provides comments to the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC) on joint proposed rules on further definition of “swap,” “security-based swap,” and “security-based swap agreement”; mixed swaps; security-based swap agreement recordkeeping, SEC: File No. S7-16-11, RIN 3235–AK65; CFTC: RIN 3038–AD46. The product definitions are part of Title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act).

SIFMA’s recommendations on key aspects include:

• excluding all loan participations from the definitions of swap and security-based swap;
• deferring rulemaking or interpretive guidance addressing what is or is not a “foreign exchange swap” or “foreign exchange forward” until after the Secretary of the Treasury has issued a final determination under Section 721 of  the Dodd-Frank Act; and
• clarifying that spot foreign exchange transactions (i.e., transactions of one currency into another that settle within a customary settlement cycle) are not “foreign exchange forwards” or “swaps” under Title VII of the Dodd-Frank Act.