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What Derivatives Are “Swaps” for Dodd-Frank Act (DFA) Purposes?


The DFA introduced new categorizations of, and terminology for, derivative products because responsibility for derivatives has been split between the CFTC and the SEC.

On one hand, “Swaps” are derivatives that are regulated by the CFTC, e.g.:
- Interest Rate swaps and other interest rate derivative contracts
- FX options and non-deliverable forwards
- Commodity derivatives
- Broad-based index equity and credit derivatives
- Treasury Locks

In contrast, “Security-based Swaps” are swaps on loans and securities regulated by the SEC:
- Single name equity derivatives
- Narrow-based index equity and credit derivatives
- Single name loan/bond credit derivatives

It is not completely clear how some product allocations are done – the SEC regulates Swaps relating to loans while the CFTC covers swaps on broad-based equity indices.

Furthermore, some products may be considered to have elements of both Swaps and Security-based swaps and will be designated as mixed swaps regulated by both the CFTC and SEC:
- Spot FX (including trades settling outside normal spot settlement time frames in connection with purchases of non-U.S. securities)
- Foreign exchange swaps and forwards (excluded by a determination of the Secretary of the Treasury, but still subject to Dodd-Frank in some respects)
- Physically-settled forwards
- Traditional securities
- Futures contracts
- “Identified” [traditional] banking products (loans and certificates of deposit)
- Transactions with the Federal Reserve and certain US and foreign government and multinational entities


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