Regulators' tighter definitions for determining which companies must register as swap dealers and major swap participants should come as a relief to many large corporations, but the cost to hedge risky exposures using swaps is nevertheless likely to rise for most end users.

The rules approved by the Securities and Exchange Commission and the Commodities Futures Trading Commission on Wednesday ramped up the threshold at which a company is required to register as a highly regulated swap dealer to $8 billion in notional value of swaps generated annually, up from $100 million in the proposal. That threshold—only for swaps not used as hedges—drops to $3 billion within five years unless regulators opt for a different level.

Two of the three prongs in the definition of a major swap participant (MSP) exclude swaps used for hedges and so wouldn't impact corporate end users at all. The third prong, which tallies hedging and nonhedging exposures, could impact end users, but market participants must exceed a current exposure threshold of $5 billion.

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