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Among the products not considered swaps: Insurance products, the aforementioned security forwards and certain consumer and commercial transactions — including interest rate locks on mortgages and fixed or variable loans for businesses. The securities included in the definition of a swap include non-deliverable forward contracts involving currencies, currency and cross currency swaps and forward rate agreements.
Now that a swap has been defined, firms trading more than $8 billion of these a year will have to comply with other regulations within sixty days of the vote being published in the Federal Register. The law firm Skadden Arps estimates that it will take 23 days for publication. After that the sixty day period kicks in for companies to comply with certain rules. Among the new rules to comply with by that time: Registration as swaps dealers by the major players in the market, record keeping and reporting on interest rates and credit swaps for swap dealers and major swap participants, and daily records of all OTC swaps.
The additional reporting will allow the public to see on the CFTC’s website aggregate data on the size of the OTC swaps market, meaning the number of and dollar amount of interest rates swaps or currency swaps being traded. Regulators will have more detailed information allowing them to better spot risks and trends.
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