The Securities and Exchange Commission and the Commodity FuturesTrading Corp. proposed rules yesterday that define swaps as theagencies move to regulate that market. Most current swaps would betraded on exchanges. The rules would exclude certain instrumentsfrom the definition of swaps, such as insurance policies and homeheating oil contracts.
The CFTC would have oversight of swaps tied to commodities andinterest rates, while the SEC would deal with those tied to loansor other securities. The CFTC decided yesterday to extend thecomment period for the new draft regulations by 30 days.
The CFTC also voted to require non-bank dealers and major swapsmarket participants to set aside $20 million in Tier 1 capital. AMarketWatch story cites CFTC Commissioner Scott O'Malia arguingthat the capital requirement would raise costs for corporate endusers.
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