CRS – The Dodd-Frank Wall Street Reform and Consumer Protection Act: Title VII, Derivatives,November 6, 2012
Swaps that are cleared will also be subject to trading on an exchange, or an exchange-like swap execution facility, regulated by either the Commodity Futures Trading Commission (CFTC) or the Securities and Exchange Commission (SEC), in the case of security-based swaps. All trades will be reported to data repositories, so that regulators will have complete information about all derivatives positions. Data on swap prices and trading volumes will be made public. The Dodd-Frank Act provides exceptions to the clearing and trading requirements for commercial end-users, or firms that use derivatives to hedge the risks of their nonfinancial business operations. Regulators may also provide exemptions for smaller financial institutions. Even trades that are exempt from the clearing and exchange-trading requirements, however, will have to be reported to data repositories or directly to regulators. This report describes some of the requirements placed on the derivatives market by the Dodd- Frank Act. It will be updated as events warrant.