The Securities and Exchange Commission (SEC) define what type of derivatives products will be regulated under the new regime created by the 2010 Dodd-Frank Wall Street reform law.
The SEC took another step towards regulating the over-the-counter (OTC) derivatives market by approving rules and interpretations for key definitions of certain derivative products. The SEC rules and interpretations define the terms "swaps" and "security-based swaps" (SBWs) and whether a particular instrument is a "swap" regulated by the Commodity Futures Trading Commission (CFTC) or a "security-based swap" regulated by the SEC. In addition, the SEC has addressed "mixed swaps", which are regulated by both agencies, and "security-based swap agreements", which are regulated by the CFTC but over which the SEC has anti-fraud and other authority. The CFTC will also propose a rule related to Clearing Exemption for Certain Swaps entered into by Cooperatives.