* SEC finally sets a date for swap dealer definitions
* Votes at SEC, CFTC have been delayed for months
* Disagreements have hinged on threshold number
* Rule must be jointly approved by both regulators
WASHINGTON, April 16 (Reuters) – U.S. securities regulators
announced late Monday they will vote on Wednesday to finalize
rules that will define which companies will be dubbed swap
dealers and face strict new regulations.
The announcement by the Securities and Exchange Commission
ends a long-running delay prompted by disagreements with the
Commodity Futures Trading Commission over how to craft the rule.
The rule must be jointly approved by both regulators.
The CFTC is also planning to vote on the rule on Wednesday
morning.
The 2010 Dodd-Frank Wall Street overhaul law requires the
SEC and CFTC to impose a series of stringent new regulatory
requirements on companies such as Goldman Sachs and
Morgan Stanley, which deal heavily in derivatives
products.
Any company dubbed a dealer or major trader of swaps will be
required to set aside more capital and margin. Dealers will also
be subject to new business conduct standards.
Under the law, the SEC will oversee trading and dealing in
security-based swaps, such as certain kinds of credit-default
swaps. The CFTC, meanwhile, will oversee the vast majority of
the market, which includes interest-rate swaps and
commodity-linked swaps.
But for the past few months, plans to finalize the rules
have been delayed numerous times and the CFTC has been forced to
cancel open meetings.
Some of the debate between the two agencies has hinged on
what threshold should be used to determine which companies will
be classified as swap dealers. The threshold would be based on
the notional value of a company’s annual swaps trade.
Some officials have feared that by setting that number too
low, it might unfairly capture legitimate hedgers who are not
banks and do not create systemic risk.
The plans by the SEC and CFTC to finalize the swap dealer
definition are crucial because many of the other Dodd-Frank
derivatives rules cannot be completed until it is clear which
companies will be dealers, and which companies won’t.
