Shipkevich Bitcoin and ICO Attorney
Felix Shipkevich July 9, 2012
CFTC Seal

The U.S. Commodity Futures Trading Commission (“CFTC”) will vote on Tuesday on the definition of a “swap,” an event which will trigger a countdown to the commencement of various regulatory compliance dates for major players in the swaps market.

The definition will affect the $650 trillion over-the-counter swaps market and bring the market within regulatory oversight.  The most stringent requirements will be on entities labeled as “swap dealers,” which are generally banks that trade more than $8 billion in swaps trades annually.  Major Wall Street firms and banks are expected to fall within the $8 billion mark and thus be required to comply with the CFTC’s registration and reporting requirements.

The definition casts uncertainty into the swaps market as firms scramble to decide which legal entities will have to register as swap dealers.  Some firms may chose to shut down trading desks or shift trading to other locations in order to avoid registration requirements.

In addition to the definition, the CFTC is expected to expand on the “end-user exemption” which exempts companies that use swaps a way to hedge risk.  These exempted end users often include non-financial companies.

Under the expected “end user rule” expansion, the CFTC would exempt small banks, credit unions, and cooperatives with up to $10 billion in assets.  A spokesperson for the CFTC was not available to comment.

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