Financial Services Bulletin: SEC And CFTC Adopt Definitions For Key Derivative Terms

SEC and CFTC Approve Joint Rules and Interpretations Defining Key Derivative Terms

On Friday, July 6, 2012, the Securities and Exchange Commission (the "SEC"), and on Tuesday, July 10, 2012, the Commodity Futures Trading Commission (the "CFTC"), approved joint rules and interpretations for key definitions of certain derivative products. The rules and interpretations further define the terms "swap" and "security-based swap" and whether a particular instrument is a "swap" regulated by the CFTC or a "security-based swap" regulated by the SEC. The SEC and CFTC joint action also addresses "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 antifraud and other authority.