The US regulator has made a leap forward by unanimously approving rules and interpretations for key definitions of certain derivative products, which will boost investors’ confidence in the market, shaded by the unscrupulous act of the firms in the recent years, SEC said.
In the current approval of regulations pertaining to the over-the-counter derivatives market, it has clearly defined the terms "swap" and "security-based swap" and whether a particular instrument is a "swap" regulated by the Commodity Futures Trading Commission (CFTC) or a "security-based swap" regulated by the SEC.
The federal agency also addresses "mixed swaps," which are regulated by both agencies, and "security-based swap agreements," which are regulated by the CFTC but over which the SEC has antifraud and other authority.
According to the SEC, the rules and interpretations have been written jointly with the CFTC implement provisions of the 2010 Dodd-Frank Act which establishes a comprehensive framework for regulating over-the-counter derivatives.
SEC Chairman Mary Schapiro said, "Approving the product rules and interpretations is another foundational step in the establishment of a new regulatory regime for derivatives."
As soon as both agencies approve the final rules, they will become effective within 60 days after the date of publication in the Federal Register.
