Swap Regulators consider $3 Billion threshold for swap-dealer registration

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U.S.  Swap Regulators are considering a threshold above $3 billion for determining which banks, hedge funds and energy firms are swap dealers under the Dodd-Frank Act.

According to various news sources, the SEC and CFTC are discussing when the “aggregate gross notional value” of a company’s dealing business requires registration as a swap-dealer.      The initial proposal of $100-million threshold was made in 2010.     This year the threshold number was raised to $3 billion and further possibility of a threshold as high as $8 billion is considered.

Post Dodd-Frank Act, SEC and CFTC are required to determine when companies are dealers and should face the highest capital and collateral requirements.     The law was designed to reduce risk and increase transparency in the $708 trillion global swaps market after 2008 credit crisis.

This regulation would mostly affect large firms, such as JPMorgan Chase & Co., Bank of America Corp. Citigroup Inc, Morgan Stanley and Goldman Sachs Group.     In aggregate, these companies control 95 percent of cash and derivatives trading for U.S. bank holding companies as of December 31, 2011.

Anna Timone (195 Posts)

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