The U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) refer to insurers in two sections of a swaps definitions document.
The SEC and the CFTC have developed the swaps definitions document to implement parts of Title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act. Title VII of the act will create a new swaps regulatory system that involves both the SEC and the CFTC. The SEC is supposed to define and regulate “security-based swaps,” and the CFTC is supposed to regulate other types of swaps.
The SEC and CFTC asking for public comments on the efforts to fine-tune the “key definitions” to be used in the regulatory process.
“Commenters are encouraged to address aspects of the key definitions such as the extent to which the definitions should be based on qualitative or quantitative factors and what those factors should be, any analogous areas of law, economics, or industry practice, and any factors specific to the commenter’s experience,” officials say.
In the Dodd-Frank Act, Congress has developed a long definition of the term “swap.”
The definition includes any agreement, contract or transaction that is a “put, call, cap, floor, collar, or similar option of any kind that is for the purchase or sale, or based on the value, of 1 or more interest or other rates, currencies, commodities, securities, instruments of indebtedness, indices, quantitative measures, or other financial or economic interests or property of any kind.”