Swaps and Security-Based Swaps
Swaps are a critical component of the U.S. capital markets, enabling firms across sectors to manage risk, stabilize costs, and support investment. From financial institutions and asset managers to corporate end users, swaps – including securities-based swaps (SBS) – are essential tools for hedging market, credit, interest rate, and other risks.
SIFMA represents leading swap and security-based swap dealers and supports a regulatory framework that promotes market integrity, transparency, and financial stability, while preserving the efficiency and accessibility of these vital risk management instruments.
Key Focus Areas
Implementing Title VII of the Dodd-Frank Act
Title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act established the foundation for today’s swaps and SBS structure, dividing oversight between the CFTC (for most swaps) and the SEC (for securities-based swaps).
SIFMA supports the objectives of Title VII — improving transparency, risk management, and regulatory oversight — while advocating for requirements that are balanced, coordinated, and appropriately tailored to market structure and participants.
We continue to work with the SEC and CFTC to ensure rules are appropriately tailored and coordinated to support liquidity and competitiveness in the U.S. swaps market.
Promoting Regulatory Harmonization and Global Coordination
Swaps are inherently global instruments, and regulatory consistency is essential to avoiding market fragmentation. SIFMA advocates for:
- Alignment between the SEC and CFTC on core requirements such as reporting, margin, and business conduct;
- Recognition of comparable foreign frameworks through workable substituted compliance to avoid duplicative regulation; and
- Targeted application of cross-border rules to prevent extraterritorial reach that could increase costs or limit liquidity.
Domestic and global coordination ensures U.S. firms remain competitive, and counterparties can transact efficiently across jurisdictions.
Supporting Effective and Proportionate Oversight
While the swap dealer framework strengthens market transparency and resilience, ongoing rule reviews are necessary to assess cumulative impacts on liquidity, operational costs, and risk management capacity. SIFMA supports data-driven regulatory evaluation to ensure that compliance obligations remain effective and proportionate.
We also encourage policymakers to recognize the distinct risk management needs of end users — including corporations, pension funds, insurers, and asset managers .
The Bottom Line
Swaps are indispensable tools for capital formation and managing risk. SIFMA supports a transparent, coordinated, and globally consistent regulatory framework that maintains market integrity and investor protection while ensuring liquidity, innovation, and efficiency remain hallmarks of the U.S. swaps markets.
